Gaw Company owns 15% of the common stock of Trace Corporation and used the fair-value method to account for this investment. Trace reported net income of $110,000 for 2018 and paid dividends of $60,000 on October 1, 2018. How much income should Gaw recognize on this investment in 2018?
A. $7,500.
B. $50,000.
C. $25,500.
D. $16,500.
E. $9,000.
Answer: E
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