Equity Method Use the following information to answer the following multiple choice. Pesto Limited is an IFRS reporter which has adopted the EQUITY METHOD of accounting for investments with significant influence. Assume the following events and transactions occurred in 2023: - Jan 1/2023 - Pesto Limited acquires ( 25 % ) of the 100,000 outstanding common shares of Sauce Corporation for ( $ 25 ) per share. - June 1/ 2023 - Sauce Corporation declared and paid cash dividends of ( $ 1.50 ) per common share. - Dec 15/ 2023 - Sauce Corporation declared and paid cash dividends of ( $ 1.50 ) per common share. - Dec 31/ 2023 - Sauce Corporation reported net income of ( $ 375,000 ). - Dec 31/2023 - Common shares of Sauce Corporation were trading in the market for ( $ 30 ) per share. How much dividend income would Pesto Limited report in the Income Statement for the year ended, Decemb

Equio Mechod Use the following information to anwwer the following multiple cholce. Pesto Limited is an IFRS reporter which has adopted the EQUITY METHOD of Accounting for investments with significant infiuence Assume the following events and transactions occurred in 2023: - Jan 1/2023 - Pesto Limited acquires 25% of the 100,000 outstanding common shares of Savice Corporation for $25 per share. - June 1/2023 - Sauce Corporation declared and paid cash dividends of $1.50 per common share. - Dec 15/ 2023 - Sauce Corporation declared and paid cash dividends of $1.50 per common share. - Dec 31/2023 - Sauce Corporation reported net income of $375,000. - Dec 31/2023 - Common shares of Sauce Corporation were trading in the market for $30 per share. How much dividend income would Pesto Limited report in the income Statement for the year ended, Decemt 1. How much dividend income would Pesto Limited report in the income Statement for the year ended, Decentibet 31, 2029? a. $300,000 b. $150,000 c. $37.500 d. $75,000 c. $0 2. What impact would the net income reported by Sauce Corporation have on Pesto's accounting records? a. The investment in asset account would be debited for $375,000. b. An equity in earnings accrual of $93,750 would increase the investment asset account. c. Investment income in the income statement would be $93,750 d. Pesto Corporation would not record net income, but only disclose it in the notes to the financial statements. e. Both (b) and (c). 3. What is the relevance of the $30 per share trade price at December 31st? ? a. This allows the investment account at year-end to be adjusted to its fair market value. b. The ending value in the investment account should be $750,000. c. The information is not relevant from an accounting perspective, as no fair market value adjustments would be ma d. The adjustment would involve recording an unrealized gain of $118,750 in the income statement. e. None of the above