9) JFE Shipping acquired 25% of RFS Inc.s common shares on 09/01/20X1. During 20X1, RFS Inc. incurred a net loss of $80,000. JFE Shipping accounts for its investment in RFS Inc. using the equity method. What effect will RFS Inc.s operations have on JFE Shippings financial statements? a) Increase assets by $20,000; Increase pretax income by $20,000.

b) Decrease assets by $20,000; Decrease pretax income by $20,000.

c) Increase assets by $5,000; Increase pretax income by $5,000. d) Decrease assets by $5,000; Decrease pretax income by $5,000.

10) At year-end, Warren holds 2,000 shares, or 4% of the common shares outstanding, of Cating Inc., a publicly traded company. Warrens average cost basis in these shares is $15.85; the market value of the stock is $15.10; and the average price of companies that are similar to Cating Inc. is $16. The value of Warrens investment in Cating Inc. that would be reported on their balance sheet at year-end is:

a) $30,200.

b) $31,700.

c) $32,000.

d) $31,100.