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On 1/1, Tuna Company purchases 25% of Stanley, Incorporated on January 1 of the current...

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Accounting

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On 1/1, Tuna Company purchases 25% of Stanley, Incorporated on January 1 of the current year for $500,000. This acquisition gives Tuna Company the ablity to apply significant influence to Stanley's operating and financing policies and Tuna Company elects to use the equity method of accounting. Stanley reports assets on that date of $1,600,000 with liabilities of $400,000. One bullding with a 15 -year life has a book value of $100,000 and a fair market value of $400,000. During year X1, Stanley, incorporated reports net income of $140,000, while paying out dividends of $70,000 for the year. How much investment income should Tuna recognize from its investment in Stanicy in year 1 ? Multiple Choice $12.500 $17500 $30.000 $35.000

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