Question
1)Bronco Corporation earns $800,000 of net income and pays cash dividends of $320,000 during 2020. Denver Corporation owns 3,000 of the 10,000 outstanding shares of
1)Bronco Corporation earns $800,000 of net income and pays cash dividends of $320,000 during 2020. Denver Corporation owns 3,000 of the 10,000 outstanding shares of Bronco Corporation. Assume Bronco Corporation stock has a fair value of $350 per share at 12/31/2020. Follow the presumptions and general rule. How much investment income should Denver report in 2020
$320,000.
$240,000.
$144,000.
$800,000.
2)
Bronco Corporation earns $800,000 of net income and pays cash dividends of $320,000 during 2020. Denver Corporation owns 3,000 of the 10,000 outstanding shares of Bronco Corporation. Assume Bronco Corporation stock has a fair value of $350 per share at 12/31/2020. Follow the presumptions and general rule. What amount should Denver show in the investment account at December 31, 2020 if the beginning of the year balance in the account was $960,000?
$1,176,000. | ||
$960,000. | ||
$1,104,000. | ||
$1,440,000. | ||
$1,050,000 |
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