Equity method mechanics with other comprehensive income An Investor company owns 40% of the outstanding common stock of an Investee company, which allows the investor to exercise signiflcant influence over the Investee. The Equity Investment was reported at $950,000 as of the end of the previous year. During the year, the investor received dividends of $100,000 from the Investee. The investee reports the followine income statement for the year: Revenues $2,600,000 Expenses 1,800,000 Net income 800,000 Other comprehensive income 100,000 Comprehensive income $900,000 a. How much equity Income should the investor report in its net income (1.e., as part of the current year Income statement)? $ 320000 b. What amount should the investor report for the Equity Investment in Its balance sheet at the end of the year?
Equity method mechanics with other comprehensive income An Investor company owns 40% of the outstanding common stock of an Investee company, which allows the investor to exercise signiflcant influence over the Investee. The Equity Investment was reported at $950,000 as of the end of the previous year. During the year, the investor received dividends of $100,000 from the Investee. The investee reports the followine income statement for the year: Revenues $2,600,000 Expenses 1,800,000 Net income 800,000 Other comprehensive income 100,000 Comprehensive income $900,000 a. How much equity Income should the investor report in its net income (1.e., as part of the current year Income statement)? $ 320000 b. What amount should the investor report for the Equity Investment in Its balance sheet at the end of the year?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:Equity method mechanics with other comprehensive income
An Investor company owns 40% of the outstanding common stock of an investee company, which allows the investor to exercise significant influence over the Investee. The Equity
Investment was reported at $950,000 as of the end of the prevlous year. During the year, the investor received dividends of $100,000 from the investee. The investee reports the followin
income statement for the year:
Revenues
$2,600,000
Expenses
1,800,000
Net income
800,000
Other comprehensive income
100,000
Comprehensive income
$900,000
a. How much equity income should the investor report In its net income (1.e., as part of the current year Income statement)?
$ 320000
b. What amount should the investor report for the Equity Investment in its balance sheet at the end of the year?
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