Question
Wilbert Co. owned 20% of Mark Company's preference share capital and 50% of the ordinary share capital. Mark Company's share capital outstanding comprised the following
Wilbert Co. owned 20% of Mark Company's preference share capital and 50% of the ordinary share capital. Mark Company's share capital outstanding comprised the following at year-end:
10% cumulative preference share capital - 2,000,000
Ordinary share capital - 7,000,000
Mark Company reported a net income of $5,000,000 for the current year.
a. How much must be recorded as investment income for the current year if the preference share capital of Mark Company are non-cumulative?
b. How much shall be recorded as investment income for the current year if the preference share capital of Mark Company are non-cumulative and that Mark Company paid $1,000,000 cash dividends for the current year?
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