On January 3, 2019, Sheppard Corporation purchased 15% of Meredith Corporation's common stock for $62,000. The investment was classified as available-for-sale. Meredith's net income for the years ended December 31, 2019 and 2020 were $18,000 and $56,000 respectively. Meredith declared no dividends during 2019; however, during 2020, the company declared a $70,000 dividend. On December 31, 2019, the fair value of Meredith's stock that Sheppard Corporation owned had increased to $73,000; in 2020, it increased again to $75,000. If Sheppard sold all of its shares of Meredith for $75,000 at the end of 2020, what would be the effect on net income for this transaction? $1.950 gain O $11.000 gain $0 gain $13,000 gain

On January 3, 2019, Sheppard Corporation purchased 15% of Meredith Corporation's common stock for $62,000. The investment was classified as available-for-sale. Meredith's net income for the years ended December 31, 2019 and 2020 were $18,000 and $56,000 respectively. Meredith declared no dividends during 2019; however, during 2020, the company declared a $70,000 dividend. On December 31, 2019, the fair value of Meredith's stock that Sheppard Corporation owned had increased to $73,000; in 2020, it increased again to $75,000. If Sheppard sold all of its shares of Meredith for $75,000 at the end of 2020, what would be the effect on net income for this transaction? $1.950 gain O $11.000 gain $0 gain $13,000 gain

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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