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An investor company purchases a 2 0 % interest in an investee company, and the investor concludes that it can exert significant influence over the
An investor company purchases a interest in an investee company, and the investor concludes that it can exert significant influence over the investee. The book value of the investees Stockholders Equity on the acquisition date is $ and the investor purchases its interest for $ The investor is willing to pay the purchase price because the investee owns a building with a fair value of $ and a book value of $ The building has a remaining useful life of years. Subsequent to the acquisition, the investee reports net income of $ and pays a cash dividend to the investor of $ At the end of the first year, the investor sells the Equity Investment for $
Required
a What is equity income for the year?
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acquisition, the investee reports net income of $ and pays a cash dividend to the investor of $ At the end of the first year, the investor sells the Equity Investment for $
Required
a What is equity income for the year?
q
b What is the gain or loss on sale of the equity investment? Indicate a loss with a negative sign.
b What is the gain or loss on sale of the equity investment? Indicate a loss with a negative sign.
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