Rich, Inc. acquired 30% of Doane Corp.s ordinary shares on January 1, 2018 for 400,000. During 2018, Doane earned 160,000 and paid dividends of 100,000. Richs 30% interest in Doane gives Rich the ability to exercise significant influence over Doanes operating and financial policies. During 2019, Doane earned 200,000 and paid dividends of 60,000 on April 1 and 60,000 on October 1. On July 1, 2019, Rich sold half of its shares in Doane for 264,000 cash.

Required: a) Before income taxes, what amount should Rich include in its 2018 income statement as a result of the investment? b) What should be the carrying amount of this investment in Richs December 31, 2018 statement of financial position?

c) What should be the gain on sale of this investment in Richs 2019 income statement? The solution for part c is as follows:

418,000 (60,000 30%) + (200,000 50% 30%) = 430,000 264,000 (430,000 2) = 49,000

but why do we multiply by 50%? (this part (200,000 50% 30%))