1. On January 1^st. 2019, X Company purchased 15% of the common shares of B Company for $80,000. At that time, the shareholders equity of B had a book value of $400,000. Any purchase discrepancy was allocated to equipment, which had a useful life of 5 years. Bs net income during the year was $120,000. B paid dividends of $100,000 on its common shares.

   The fair value of As investment was $81,000.

   Assume that X accounts for its investment in B using the cost method. How much income should X report from its investment in B for 2019?

   a. $11,000

   b. $14,000

   c. $15,000

   d. $18,000.

   vii. Assume that X accounts for its investment in B using the equity method. How much income should X report from its investment in B for 2019?

   a. $11,000

   b. $14,000

   c. $15,000

   d. $18,000.