On January 1, Rook Corporation, a publicly traded company, purchased 25 of Hook Ltd common shares for $400,000 At December 31, Hook paid a $32,000 dividend (Rook received its share that day) and reported profit of $800,000 The shares ' fair value at December 31 was $420,000 Record each of these tra...

Jan 1 Investment in Associates 400000 Cash 400000 Dec 31 Cas ...

On January 1, Rook Corporation, a publicly traded company, purchased 25% of Hook Ltd. common shares for

Question:

On January 1, Rook Corporation, a publicly traded company, purchased 25% of Hook Ltd. common shares for $400,000. At December 31, Hook paid a $32,000 (Rook received its share that day) and reported profit of $800,000. The shares' fair value at December 31 was $420,000. Record each of these transactions, assuming Rook has significant influence over Hook and is using the equity method to account for this investment. How much revenue would be reported by Rook because of its share of Hook?
Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...