At the beginning of X1, Company A paid $600,000 in cash, held 35% of the shares of Company B and had significant influence over Company B. At that time, Company B had a share capital of $1,200,000 (par value of $10 per share). In year X1, Company B makes a net profit of $70,000 and pays a dividend of $40,000. On the 12th and 31st day of X1, the price of Company B's stock is $15 per share. Compared with using the equity method, how much higher or lower will Company A adopt the cost method for the retained earnings in year X1?

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10500 lower Explanation The cost method records income fr... View the full answer