REFERENCE: Ref.01_03 On January 1,2007,Deuce Inc.acquired 15% of Wiz Co.'s Outstanding Common

REFERENCE: Ref.01_03
On January 1,2007,Deuce Inc.acquired 15% of Wiz Co.'s outstanding common stock for $62,400 and categorized the investment as an available-for-sale security.Wiz earned net income of $96,000 in 2007 and paid dividends of $36,000.On January 1,2008,Deuce bought an additional 10% of Wiz for $54,000.This second purchase gave Deuce the ability to significantly influence the decision making of Wiz.During 2008,Wiz earned $120,000 and paid $48,000 in dividends.As of December 31,2008,Wiz reported a net book value of $468,000.For both purchases,Deuce concluded that Wiz Co.'s book values approximated fair values and attributed any excess cost to goodwill.
-What amount of equity income should Deuce have reported for 2008?

A) $30,000.
B) $16,420.
C) $38,340.
D) $18,000.
E) $32,840.

Correct Answer:

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