Question
Sandhu Travel Agency Ltd. has 400,000 common shares authorized and 128,000 shares issued on December 31, 2020. On January 2, 2021, Paver Inc. purchased shares
Sandhu Travel Agency Ltd. has 400,000 common shares authorized and 128,000 shares issued on December 31, 2020. On January 2, 2021, Paver Inc. purchased shares of Sandhu Travel Agency for $41 per share. Paver intends to hold these shares as a long-term investment. Pavers accountant prepared a trial balance at December 31, 2021, under the assumption that Paver could not exercise significant influence over Sandhu Travel Agency. Under this assumption, the trial balance included the following accounts and amounts related to the Sandhu investment:
Long-term investments | $1,376,000 | ||
Dividend income | 96,000 | ||
Unrealized gain on long-term investments | 64,000 |
(F) Assuming that Paver does use the equity method, what amount will it report on its statement of income for 2021 regarding this investment?
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