Nichols Enterprises has an investment in 27,000 shares of Elliott Electronics that Nichols accounts for as a security available for sale. Elliott shares are publicly traded on the New York Stock Exchange, and The Wall Street Journal quotes a price for those shares of $12 a share, but Nichols believes the market has not appreciated the full value of the Elliott shares and that a more accurate price is $23 a share. Nichols should carry the Elliott investment on its balance sheet at:

$621,000.

$324,000.

Either $324,000 or $621,000, as either are defensible valuations.

$472,500, the midpoint of Nichols's range of reasonably likely valuations of Elliott.

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Zwick Company bought 23,500 shares of the voting common stock of Handy Corporation in January 2016. In December, Handy announced $208,600 net income for 2016 and declared and paid a cash dividend of $8 per share on the 209,000 shares of outstanding common stock. Zwick Company's dividend revenue from Handy Corporation in December 2016 would be:

$ 0.

$23,455.

$188,000.

None of these answer choices is correct.

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Sox Corporation purchased a 30% interest in Hack Corporation for $1,825,000 on January 1, 2016. On November 1, 2016, Hack declared and paid $2.3 million in dividends. On December 31, Hack reported a net loss of $4.4 million for the year. What amount of loss should Sox report on its income statement for 2016 relative to its investment in Hack?

$1,320,000.

$1,825,000.

$1,135,000.

$690,000.

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Assume that, on January 1, 2016, Matsui Co. paid $2,688,000 for its investment in 96,000 shares of Yankee Inc. Further, assume that Yankee has 300,000 total shares of stock issued. The book value and fair value of Yankee's identifiable net assets were both $600,000 at January 1, 2016. The following information pertains to Yankee during 2016:

Net income	$300,000
Dividends declared and paid	$90,000
Market price of common stock on 12/31/2016	$30/share

What amount would Matsui report in its year-end 2016 balance sheet for its investment in Yankee?

$3,078,000.

$2,778,000.

$2,755,200.

None of these answer choices is correct.

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Gerken Company concluded at the beginning of 2016 that the company's ownership interest in DillCo had increased to the point that it became appropriate to begin using the equity method to account for the investment. The balance in the investment account is $75,000 at the time of the change, and accountants working with company records determined that the balance would have been $82,000 if the account had been adjusted for investee net income and dividends as prescribed by the equity method. After implementing the change to the equity method, if financial statements were prepared:

Net income will be unchanged, and retained earnings will be higher by $7,000.

Net income and retained earnings will be higher by $7,000.

Net income and retained earnings will be higher by $82,000.

The accounts will be unchanged, because no adjustment is necessary.

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