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    Fair-Value Method: How much income should Gaw recognize on this investment in 2002?

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    Gaw Company owns 15% of the common stock of Teal Corporation and used the fair-value method to account for this investment. Teal reported net income of $110,000 for 2002 and paid dividends of $60,000 on October 1, 2002. How much income should Gaw recognize on this investment in 2002?

    A) $16,500

    B) $ 9,000

    C) $25,500

    D) $ 7,500

    E) $50,000

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    https://brainmass.com/business/accounting/fair-value-method-how-much-income-should-gaw-recognize-on-this-investment-in-2002-84104

    Solution Preview

    Under the fair value method, only the dividends received are counted ...

    Solution Summary

    The solution explains the fair-value method of accounting for investments. It includes brief calculations and the answer.

    $2.19

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