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QUESTION 1 Essex Co purchased 1,000 shares of BBC Co, representing 10% of BBC, for...

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Accounting

QUESTION 1 Essex Co purchased 1,000 shares of BBC Co, representing 10% of BBC, for $15 per share on January 1. During the year, BBC paid dividends of $.75 per share and reported net income of $20,000. The share price at the end of the year was $14.50 What would be the investment income reported by Essex if they used the fmv method of accounting for their BBC holdings? What would they report for investment income if they used the equity method?

  1. $250 for fmv method; $2,000 for equity method

2. $500 loss for fmv method; $2,000 for equity method

3. $750 for fmv method; $250 for equity method

4. $750 for fmv method; $500 loss for equity method

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