On January 1, 2018, the Regal Company purchased 30% of the outstanding voting stock of the Air Corporation for $300,000; the book value of Air's net assets at the date of purchase was $900,000. Regal was willing to pay more than the book value of the acquired shares because Air's depreciable assets with a ten-year remaining life were undervalued. Regal uses straight-line depreciation. During 2018, Air reported net income of $75,000 and paid dividends of $30,000.The income reported by Regal during 2018 pertaining to the Air investment was
A. $19,500
B. $31,500
C. $22,500
D. $ 9,000
Answer: A
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