Answered step by step
Verified Expert Solution
Question
1 Approved Answer
An investor company owns 30% of the common stock of an investee company. The investor has significant influence over the investee. During the year ended
An investor company owns 30% of the common stock of an investee company. The investor has significant influence over the investee. During the year ended December 31, 2019, the investee bought $100,000 of inventory from the investor. The investor includes gross profit of 40% on all inventory sales transactions. At December 31, 2019, the investee held $200,000 of total inventory, with $20,000 of this inventory purchased from the investor during 2019. For the year ended December 31, 2019, the investor and investee reported $90,000 and $40,000, respectively, of net income. What amount of investment income from the investee did the investor recognize during the year ended December 31, 2019? Select one: o a. $12,000 O b. $8,000 O C. $14,400 O d. $9,600
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started