1. Consolidated retained earnings at the end of the year equals:

a. Beginning retained earnings of the parent plus consolidated net income and consolidated other comprehensive income, less declared dividends of the parent and the subsidiary.

b. Beginning retained earnings of the parent plus beginning retained earnings of the subsidiary plus consolidated net income less declared dividends of the parent and the subsidiary.

c. Beginning retained earnings of the parent plus consolidated net income less declared dividends of the parent.

d. Beginning retained earnings of the parent plus consolidated net income less declared dividends of the parent.

2. Davidson Company uses the equity method and acquired 30% of the common stock of Otter Corporation, at underlying book value. For the same year, Otter reported net income fo $25,000 which includes a 10,000 extraordinary gain. No dividends were paid during the year. What is the amount of the increase in the investment in Otter Corporation increase for the year?

		a. $15,000
		b. $25,000
		c. $10,000
		d. $0