On January 1, 2019, Spring Co. purchased a 25% interest in Fall Inc. for $500,000. For the year ended December 31, 2019, Fall reported net income from operations of $65,000 and a loss from discontinued operations of$10,000 (net of tax). Fall paid dividends of $11,500 on December 31, 2019.Assume that Spring uses the equity method to account for its investment in Fall. Which of the following is the amount that would be reported on Spring's 2019 income statement relating to Fall?Multiple ChoiceInvestment income of $13,750.Dividend revenue of $2,875.Investment income of $16,250 and investment loss, discontinued operations of $2,500.Investment income of $13,750 and investment loss, discontinued operations of $2,500.

The equity method is used to account for investments in common stock. It is used to record the…

Answered: On January 1, 2019, Spring Co.…

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter13: Investments And Long-term Receivables

Section: Chapter Questions

Problem 14RE

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