Question
On January 2, 2020, Hui Corporation purchased 40% of the outstanding shares of Tao Corporation for $800,000. Net income reported by Tao Corporation for
On January 2, 2020, Hui Corporation purchased 40% of the outstanding shares of Tao Corporation for $800,000. Net income reported by Tao Corporation for 2020 and 2021 was, respectively, $100,000 and $125,000. Dividends paid by Tao Corporation during 2020 and 2021 were, respectively, $60,000 and $75,000. Hui Corporation has representation on the Tao corporation board of directors. Assume on December 31, 2021, Hui Corporation sells 50% of its investment in Tao Corporation for $525,000. Hui Corporation will report a A. gain on sale of investment of $80,000 OB. loss on sale of investment of $321,000 C. loss on sale of investment of $152,000 D. gain on sale of investment of $107,000
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