Question
1. The Alpha company owns 10% of the common shares of the Beta company. For the year 2021, Beta reported net income in the amount
1. The Alpha company owns 10% of the common shares of the Beta company. For the year 2021, Beta reported net income in the amount of $ 100,000 and paid dividends on the amount of $ 25,000. The market value of the shares decreased by $ 5,000 in 2021. To In 2021, Alpha will recognize: A. Investment income in the amount of $ 10,000. B. Dividend income in the amount of $ 2,500 less market loss of $ 500. C. Both investment income of $ 10,000 and dividend income of $ 2,500 and loss of $ 500. D. Only the market loss of $ 500. 2. Suppose that in question 1, Alpha owns 30% of the shares of Beta. By 2021, Alpha will recognize: A. Investment income in the amount of $ 30,000. B. Dividend income in the amount of $ 7,500. C. Investment income of $ 30,000 less market loss of $ 1,500. D. Investment income of $ 30,000 less the $ 7,500 of dividends, or $ 22,500.
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