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    Income Recognition

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    1. 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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    Under the fairvalue method, the investment will be treated as available for sale. In this ...

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    The solution explains the income recognition using the fair value method