9) On January 1, 2017, Pawson, Incorporated, paid $100,000 for a 30% interest in Sacco Corporation. This investee had assets with a book value of $550,000 and liabilities of $300,000. A patent held by Sacco having a book value of $10,000 was actually worth $40,000 with a six-year remaining life. Any goodwill associated with this acquisition is considered to have an indefinite life. During 2017, Sacco reported income of $50,000 and paid dividends of $20,000 while in 2018 it reported income of $75,000 and dividends of $30,000. Assume Pawson has the ability to significantly influence the operations of Sacco.

The amount allocated to goodwill at January 1, 2017, is

A. $25,000. B. $13,000. C. $9,000. D. $10,000. E. $16,000.

10)Pace Company owns 80% of the common stock of Speed Co. and uses the equity method to account for the investment. During 2017, Speed reported income of $250,000 and paid dividends of $80,000. There is no amortization associated with the investment. During 2017, how will Paces investment account change related to this investment?

A. $136,000 increase. B. $200,000 increase. C. $0 change. D. $136,000 decrease. E. $200,000 decrease.