Question
On January 1, 2009, Halley Company acquired 8 percent of the outstanding common stock of Ghosh Corporation for $650,000. Halley appropriately uses the cost method
On January 1, 2009, Halley Company acquired 8 percent of the outstanding common stock of Ghosh Corporation for $650,000. Halley appropriately uses the cost method to account for its investment in Ghosh. Ghosh reported net income and paid dividends for the years ended 2009, 2010, and 2011, as follows:
Year | Net Income | Dividends |
2009 | $100,000 | $70,000 |
2010 | $70,000 | $70,000 |
2011 | $30,000 | $70,000 |
Based on the above information the amount of income related to its investment in Ghosh to be reported by Halley for the year 2010 is:
a | $5,600 | |
b. | $10,500 | |
c. | $70,000 | |
d. | $8,000 | |
e. | None of the above |
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