Question
Coop Incorporated owns 10 percent of Chicken Incorporated as an investment for trading. Coop's Chicken stock appreciated by $15,000 during the year. Both Coop and
Coop Incorporated owns 10 percent of Chicken Incorporated as an investment for trading. Coop's Chicken stock appreciated by $15,000 during the year. Both Coop and Chicken are corporations. Chicken pays Coop a dividend of $10,000 in the current year. Chicken also reports financial accounting earnings of $20,000 for that year. Assume Coop follows the general rule of accounting for investment in Chicken. What is the amount and nature of the booktax difference to Coop associated with its investment in Chicken stock (ignoring the dividends received deduction)?
Group of answer choices
$1,000 unfavorable
$10,000 favorable
$15,000 unfavorable
$15,000 favorable
None of the choices is correct.
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