Equity Method

On January 1, 2011, The Miller Corporation purchased 300,000 shares of The Mayfair Corporation for $5.7 million. The investment represented 40% of The Mayfair Corporation's outstanding common shares. During 2011, Mayfair reported net earnings of $2.25 million and paid a cash dividend of $0.15 per share. During 2012, Mayfair reported a net loss of $180,000 and again paid a dividend of $0.15 per share. Calculate the book value of Miller's investment in Mayfair as of December 31, 2011, and December 31, 2012.

2011 Answer

2012 Answer