Rationale: Montevideo Corp. should use the fair$-$value method to account for its investment in Hutchinson Inc.; therefore, a dividend would not affect its investment account. Minneap Investments should use the equity method to account for its investment in Hutchinson Inc. Therefore, a dividend will be deducted from its investment account and added to cash.

$10.$ Rochester Corp. holds a $15\%$ equity investment in LaCrosse Inc. Reedsburg Investments holds $45\%$ of LaCrosse's stock. On October $1,2017,$ LaCrosse declares and pays dividends to its stockholders. How will the dividend affect each company's net income for the year?

$\backslash$table$[[,$Rochester Corp.,Reedsburg Investments$],[$A$),$No effect,Increase$],[$B$),$Increase,No effect$],[$C$),$No effect,No effect$],[$D$),$Increase,Increase$],[$E$),$There is not enough information to determine the effect.,$]]$

Madison Corporation purchases an investment in Lake Geneva, Inc. at a purchase price of $$8$ million cash, representing $40\%$ of the book value of Lake Geneva, Inc. During the year, Lake Geneva reports net income of $$1,360,000$ and pays $$335,200$ of cash dividends. At the end of the year, the market value of Madison's investment is $$10\mathrm{.}0$ million.

What is the year$-$end balance of the equity investment in Lake Geneva?

A$)$ $$8,409,920$

B$)$ $$9,024,800$

C$)$ $$10,000,000$

D$)$ $$8,000,000$

E$)$ $$8,544,000$

Frankfort Corporation purchases an investment in Bradley, Inc. at a purchase price of $$9\mathrm{.}8$ million cash, representing $40\%($at book value$)$ of Bradley. During the year, Bradley reports net income of $$1,680,000$ and pays $$413,000$ of cash dividends. At the end of the year, the market value of Frankfort's investment is $$11\mathrm{.}9$ million.

What amount of equity earnings would be reported by Frankfort Corporation?

A$)$ $$165,000$

B$)$ $$672,000$

C$)$ $$507,000$

D$)$ $$1,267,000$

E$)$ None of these are correct.

Columbus Company owns $25\%$ of Zanesville Inc. and accounts for the investment using the equity method. During the year, Zanesville Inc. reports a net loss of $$1,121,400$ and pays total dividends $0$ $$51,660.$

Which of the following describes the change in Columbus's investment in Zanesville during the year?

A$)$ The investment increases by $$332,010.$

B$)$ The investment decreases by $$293,265.$

C$)$ The investment decreases by $$280,350.$

D$)$ The investment decreases by $$267,435.$

E$)$ None of these are correct.

Which of the following would not be considered an intangible asset?

A$)$ Trademarks and internet domain names

B$)$ Plant, Property, and Equipment

C$)$ Patents, computer software, databases and trade secrets

D$)$ Customer lists, production backlog, and customer contracts