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Pat Corporation purchased 225,000 shares of Sat Corporation on January 1, 2003, for $540,000 (at $2.4 per share). Sat Corporation has 600,000 shares outstanding. Sat
Pat Corporation purchased 225,000 shares of Sat Corporation on January 1, 2003, for $540,000 (at $2.4 per share). Sat Corporation has 600,000 shares outstanding. Sat Corporation earned net income of $360,000 and paid dividends of $100,000 during 2003. As of December 31, 2003, Sat's stock price fell to $2.1 per share. Required: a. What method should be used to account for the Sat Corporation invesetment? b. How much revenue will be recorded by Pat Corporation in 2003 from its investment in Sat Corporation? c. What is the balance in Pat's investment account at the end of 2003? d. Assume all of the above facts except that on January 1, 2003, Pat Corporation purchased 90,000 shares of Sat Corporation for short-term capital gains. How much revenue will be recorded by Pat Corporation in 2003 from its investment in Sat Corporation
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