Question

On January 1, 2021, ABC Company purchased 15,000 shares (38%) of Riley Corp stock for $140,000....

On January 1, 2021, ABC Company purchased 15,000 shares (38%)
of Riley Corp stock for $140,000. During 2021, Riley Corp
reported a net income of $73,000 and paid dividends totaling
$15,000. At December 31, 2021 the Riley Corp stock was worth
$23.50 per share.

Calculate the amount of investment revenue related to the investment
in Riley Corp reported on ABC Company's 2021 income statement.

Homework Answers

Answer #1
As ABC corporation purchased more than 20% shares of Riley company(i.e. 38%)
Therefore, the equity method of recording the investment is applicable.
The Equity method states that share of net income reported by investee company shall be taken as revenue of investor.
And the dividend paid by investee company shall be taken as amount of investment realised.
Therefore,
Investment revenue for ABC corporation:
Net Income reported by Riley: 73,000
Multiply: % of share of investment purchased 38%
Investment revenue for ABC corporation: 27740
Answer is $27,740
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
On October 9, 2021, ABC Company purchased 17,000 shares (11%) of Rose Company stock for $22...
On October 9, 2021, ABC Company purchased 17,000 shares (11%) of Rose Company stock for $22 per share. The market value per share of Rose's stock at December 31, 2021 was $26. ABC sold 3,100 shares of its investment in Rose Company on May 1, 2022 $21 per share. At December 31, 2022, the market value of Rose's stock was $24 per share. ABC Company sold 2,800 shares of its Rose Company stock on June 13, 2023 for $28 per...
On January 1, 2021 M.T. Glass purchased the following investments: 1. 7,500 shares (representing 15%) of...
On January 1, 2021 M.T. Glass purchased the following investments: 1. 7,500 shares (representing 15%) of ZZ Company stock for $98,000 2. 25,000 shares (representing 40%) of AA Company stock for $440,000 M.T. Glass recorded the sale of some of its investments in 2022 as follows: 1. September 1 sold 5,000 shares of the ZZ Company stock for $76,000 2. December 31 sold 3,000 shares of the AA Company stock for $120,000 AA Company and ZZ Company reported the following...
On January 1, 2021 M.T. Glass purchased the following investments: 1. 7,500 shares (representing 15%) of...
On January 1, 2021 M.T. Glass purchased the following investments: 1. 7,500 shares (representing 15%) of ZZ Company stock for $98,000 2. 25,000 shares (representing 40%) of AA Company stock for $440,000 M.T. Glass recorded the sale of some of its investments in 2022 as follows: 1. September 1 sold 5,000 shares of the ZZ Company stock for $76,000 2. December 31 sold 4,000 shares of the AA Company stock for $120,000 AA Company and ZZ Company reported the following...
On January 1, 2021 M.T. Glass purchased the following investments: 1. 7,500 shares (representing 15%) of...
On January 1, 2021 M.T. Glass purchased the following investments: 1. 7,500 shares (representing 15%) of ZZ Company stock for $98,000 2. 25,000 shares (representing 40%) of AA Company stock for $440,000 M.T. Glass recorded the sale of some of its investments in 2022 as follows: 1. September 1 sold 5,000 shares of the ZZ Company stock for $76,000 2. December 31 sold 4,000 shares of the AA Company stock for $120,000 AA Company and ZZ Company reported the following...
On January 1, 2021 M.T. Glass purchased the following investments: 1. 7,500 shares (representing 15%) of...
On January 1, 2021 M.T. Glass purchased the following investments: 1. 7,500 shares (representing 15%) of ZZ Company stock for $98,000 2. 25,000 shares (representing 40%) of AA Company stock for $440,000 M.T. Glass recorded the sale of some of its investments in 2022 as follows: 1. September 1 sold 5,000 shares of the ZZ Company stock for $76,000 2. December 31 sold 4,000 shares of the AA Company stock for $120,000 AA Company and ZZ Company reported the following...
On January 1, 2021 M.T. Glass purchased the following investments: 1. 7,500 shares (representing 15%) of...
On January 1, 2021 M.T. Glass purchased the following investments: 1. 7,500 shares (representing 15%) of ZZ Company stock for $98,000 2. 25,000 shares (representing 40%) of AA Company stock for $440,000 M.T. Glass recorded the sale of some of its investments in 2022 as follows: 1. September 1 sold 5,000 shares of the ZZ Company stock for $76,000 2. December 31 sold 4,000 shares of the AA Company stock for $120,000 AA Company and ZZ Company reported the following...
A company (the investor) purchased 40,000 shares of common stock of the investee for $40 per...
A company (the investor) purchased 40,000 shares of common stock of the investee for $40 per share on January 2, 2020. The investee had 100,000 shares of common stock outstanding during 2021, paid cash dividends of $62,000 during 2021, and reported net income of $330,000 for 2021. The investor company should report revenue from investment for 2021 in the amount of....
On January 1, 2021, Indigo Corp. had 484,000 shares of common stock outstanding. During 2021, it...
On January 1, 2021, Indigo Corp. had 484,000 shares of common stock outstanding. During 2021, it had the following transactions that affected the Common Stock account. February 1 Issued 116,000 shares March 1 Issued a 10% stock dividend May 1 Acquired 99,000 shares of treasury stock June 1 Issued a 3-for-1 stock split October 1 Reissued 61,000 shares of treasury stock Determine the weighted-average number of shares outstanding as of December 31, 2021. The weighted-average number of shares outstanding enter...
ABC Company acquired 41% of Davis Company's common stock for $400,000 on January 1, 2022. During...
ABC Company acquired 41% of Davis Company's common stock for $400,000 on January 1, 2022. During 2022, Davis Company reported a net income of $59,000 and paid dividends to its stockholders totaling $20,000. For 2023, Davis Company earned a net income of $91,000 and paid dividends totaling $38,000. On December 31, 2023, ABC Company sold 10% of its investment in Davis Company for $63,000 cash. Calculate the amount of the gain reported by ABC Company as a result of its...
Part A On January 2, 2017, Kesha Company purchased 10,000 shares of the stock of Petty...
Part A On January 2, 2017, Kesha Company purchased 10,000 shares of the stock of Petty Corp., and did not obtain significant influence. The investment is intended as a long-term investment. The stock was purchased for $5 per share, and represents a 10% ownership stake. Petty Corp made $20,000 of net income in 2017, and paid dividends of $5,000 on December 15, 2017. On December 31, 2017, Petty Corp's stock was trading on the open market for $8 per share...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT