3. Zwick Company bought 27,500 shares of the voting common stock of Handy Corporation in January 2018. In December, Handy announced a $206,400 net income for 2018 and declared and paid a cash dividend of $6 per share on all 207,000 shares of its outstanding common stock. Zwick Company's dividend revenue from Handy Corporation in December 2018 would be:

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4. Hawk Corporation purchased 10,000 Diamond Corporation bonds in 2015 for $68 per bond and classified the investment as securities available for sale. The value of the Diamond investment was $73 per bond on December 31, 2016, and $96 on December 31, 2017. In 2018, Hawk sold all of its Diamond investments at $145 per bond.

In its 2018 income statement, Hawk would report:

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5. On July 1, 2018, Tremen Corporation acquired 35% of the shares of Delany Company. Treatment paid $3,020,000 for the investment, and that amount is exactly equal to 35% of the book value of identifiable net assets on Delany's balance sheet. Delany recognized a net income of $1,400,000 for 2018 and paid $150,000 of dividends each quarter to its shareholders. After all closing entries are made, Tremens "Investment in Delany Company" account would have a balance of:

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6.

Jack Corporation purchased a 22% interest in Jill Corporation for $1,840,000 on January 1, 2018. Jack can significantly influence Jill. On December 10, 2018, Jill declared and paid $2.7 million in dividends. Jill reported a net loss of $5.5 million for the year. What amount of loss should Jack report in its income statement for 2018 relative to its investment in Jill?

Multiple Choice

$1,210,000.

$1,246,000.

$2,700,000.

$1,840,000.

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8.

Gerken Company concluded at the beginning of 2018 that the company's ownership interest in DillCo had increased to the point that it became appropriate to begin using the equity method to account for the investment. The balance in the investment account is $64,000 at the time of the change, and accountants working with company records determined that the balance would have been $92,000 if the account had been adjusted for investee net income and dividends as prescribed by the equity method. After implementing the change to the equity method, if financial statements were prepared:

Multiple Choice

Net income will be unchanged, and retained earnings will be higher by $28,000.

Net income and retained earnings will be higher by $92,000.

The accounts will be unchanged because no adjustment is necessary.

Net income and retained earnings will be higher by $28,000.

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9.

On January 1, 2018, Green Corporation purchased 24% of the outstanding voting common stock of Gold Company for $300,750. The book value of the acquired shares was $275,400. The excess of cost over book value is attributable to an intangible asset on Gold's books that was undervalued and had a remaining useful life of five years. For the year ended December 31, 2018, Gold reported a net income of $125,500 and paid cash dividends of $25,900. What is the carrying value of Green's investment in Gold at December 31, 2018?

Multiple Choice

$319,584.

$294,534.

$300,750.

$324,654.

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10.

Wang Corporation purchased $280,000 of Hales Inc.'s 7% bonds at par with the intent and ability to hold the bonds until they matured in 2022, so Wang classifies its investment as held to maturity. Unfortunately, a combination of problems at Hales and in the debt market caused the fair value of the Hales investment to decline to $231,000 in 2018. Wang views this decline as an other-than-temporary (OTT) impairment. Wang calculates that, of the $49,000 drop-in fair value, $17,000 of it relates to credit losses and $32,000 relates to non-credit losses. If Wang accounts for the Hales bonds under IAS No. 39, before-tax net income for 2018 will be reduced by:

Multiple Choice

$49,000.

$32,000.

$17,000.

$0.