Question
On February 5, 2020, Apple Inc. purchased 12% of Pear Inc.s common stock for $50,000. Pears net income for the years ended December 31, 2020,
On February 5, 2020, Apple Inc. purchased 12% of Pear Inc.s common stock for $50,000. Pears net income for the years ended December 31, 2020, and December 31, 2021, were $10,000 and $50,000, respectively. Pear did not pay any dividends in 2020. Pear declared and paid a dividend of $60,000 to all its shareholders in 2021. The fair value of the Pear stock owned by Apple Inc. is valued at $70,000 and $130,000 on December 31, 2020 and December 31, 2021, respectively. How much should Apple Inc. show in the 2020 income statement as income from this investment?
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