Question
Smith's Company purchased 40% of Alex's Company stock for $50,000. The purchase occurred on 1/1/Year4. Smith Company has significant influence over Alex Company. Alex's Company
Smith's Company purchased 40% of Alex's Company stock for $50,000. The purchase occurred on 1/1/Year4. Smith Company has significant influence over Alex Company.
Alex's Company balance sheet showed equity of $125,000 on 1/1/Year4.
Alex's Company had net income of $80,000 and declared total dividends of $22,000 in Year4.
Alex's Company common stock had a fair value of $210,000 at 12/31/Year4.
What amount does Smith's Company will report as income from this investment for Year4?
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Entrepreneurial Financial Management An Applied Approach
Authors: Jeffrey R. Cornwall, David O. Vang, Jean M. Hartman
4th Edition
0765646854, 978-0765646859
