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Frankfort Corporation purchases an investment in Bradley, Inc. at a purchase price of $9.8 million cash, representing 40% (at book value) of Bradley. During the
Frankfort Corporation purchases an investment in Bradley, Inc. at a purchase price of $9.8 million cash, representing 40% (at book value) of Bradley. During the year, Bradley reports net income of $1,680,000 and pays $413,000 of cash dividends. At the end of the year, the market value of Frankforts investment is $11.9 million. What amount of equity earnings would be reported by Frankfort Corporation?
Select one:
A. $165,000
B. $672,000
C. $507,000
D. $1,267,000
E. None of the above
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