QUESTION 1 THE FOLQUESTION 1 1. THE FOLLOWING INFORMATION IS USED FOR QUESTIONS 15. Quiz Company reported the following transactions related to its investments. gives Quiz Company the ability to significantly influence the investee. On the date of acquisition, the fair value of A Company's net assets exceeded the book value by $400,000. The amount is attributable to a building with a remaining useful life of 20 years. February 1 Purchased 2,000 shares of B Company common stock for $25 per share. The amount represents a less than 1% ownership interest. On the date of acquisition, the fair value of B Company's net assets exceeded the book value by $100,000. The amount is attributable to equipment with a remaining useful life of 10 years. May 1 Received dividends of $0.50 per share for the B Company common stock. July 1 Purchased $100,000,5% C Company bonds for $100,000. The bonds pay interest on June 30 and December 31 . Quiz Company management has the positive intent and ability to hold the bonds until they mature. July 1 Purchased $50,000,4% D Company bonds for $50,000. The bonds pay interest on July 1 and January 1 . Quiz Company management does not plan to actively trade the bonds but also does not plan to hold the bonds until they mature. August 6 Received dividends of $0.25 per share for the A Company common stock. October 1 Purchased $80,000,6% E Company bonds for $80,000. The bonds pay interest quarterly with the next interest payment date on December 31. Quiz Company management intends to trade the bonds in the short term. Year 2 January 1 Sold all of the C Company bonds for $105,000. January 1 Sold all of the D Company bonds for $55,000. January 1 Sold all of the E Company bonds for $90,000. January 1 Sold 1,000 shares of the B Company common stock for $27 per share. May 1 Received dividends of $0.50 per share for the remaining shares of B Company common stock. August 6 Received dividends of $0.25 per share for the A Company common stock. A Company reported net income of $1,000,000 for the year ended December 31, Year 1 and $1,200,000 for the year ended December 31 , Year 2. B Company reported net income of $2,000,000 for the year ended December 31, Year 1 and $2,100,000 for the year ended December 31 , Year 2. The following fair values were available for the investments as of December 31, Year 1 and Year 2. Determine the pretax increase (decrease) in net income in Year 1 resulting from the investments. Give your answer using dollar signs and commas but no decimal points (cents). Example: $12,345 or $(12,345) QUESTION 1 THE FOLQUESTION 1 1. THE FOLLOWING INFORMATION IS USED FOR QUESTIONS 15. Quiz Company reported the following transactions related to its investments. gives Quiz Company the ability to significantly influence the investee. On the date of acquisition, the fair value of A Company's net assets exceeded the book value by $400,000. The amount is attributable to a building with a remaining useful life of 20 years. February 1 Purchased 2,000 shares of B Company common stock for $25 per share. The amount represents a less than 1% ownership interest. On the date of acquisition, the fair value of B Company's net assets exceeded the book value by $100,000. The amount is attributable to equipment with a remaining useful life of 10 years. May 1 Received dividends of $0.50 per share for the B Company common stock. July 1 Purchased $100,000,5% C Company bonds for $100,000. The bonds pay interest on June 30 and December 31 . Quiz Company management has the positive intent and ability to hold the bonds until they mature. July 1 Purchased $50,000,4% D Company bonds for $50,000. The bonds pay interest on July 1 and January 1 . Quiz Company management does not plan to actively trade the bonds but also does not plan to hold the bonds until they mature. August 6 Received dividends of $0.25 per share for the A Company common stock. October 1 Purchased $80,000,6% E Company bonds for $80,000. The bonds pay interest quarterly with the next interest payment date on December 31. Quiz Company management intends to trade the bonds in the short term. Year 2 January 1 Sold all of the C Company bonds for $105,000. January 1 Sold all of the D Company bonds for $55,000. January 1 Sold all of the E Company bonds for $90,000. January 1 Sold 1,000 shares of the B Company common stock for $27 per share. May 1 Received dividends of $0.50 per share for the remaining shares of B Company common stock. August 6 Received dividends of $0.25 per share for the A Company common stock. A Company reported net income of $1,000,000 for the year ended December 31, Year 1 and $1,200,000 for the year ended December 31 , Year 2. B Company reported net income of $2,000,000 for the year ended December 31, Year 1 and $2,100,000 for the year ended December 31 , Year 2. The following fair values were available for the investments as of December 31, Year 1 and Year 2. Determine the pretax increase (decrease) in net income in Year 1 resulting from the investments. Give your answer using dollar signs and commas but no decimal points (cents). Example: $12,345 or $(12,345)