Consider the following facts: - Company A owns 30% of Company B. - During 2015,

Question

Consider the following facts:
- Company A owns 30% of Company B.
- During 2015, Company B reported earnings of $650,000.
- During 2015, Company B paid dividends of $345,000.

With respect to Company A's Investment in Company B account and its net income, which of the following is true?

Company A's Investment in Company B account will increase by $91,500 and its net income will increase by $195,000.

Company A's Investment in Company B account will not change and its net income will increase by $103,500.

Company A's Investment in Company B account will increase by $91,500 and its net income will increase by $103,500.

Company A's Investment in Company B account will increase by $195,000 and its net income will increase by $103,500.

None of these answers are correct.

Explanation / Answer

Consider the following facts: - Company A owns 30% of Company B. - During 2015,

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