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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?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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?
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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