Jack Corporation purchased a 21% interest in Jill Corporation for $1,860,000 on January 1, 2021. Jack...
Jack Corporation purchased a 21% interest in Jill Corporation for $1,860,000 on January 1, 2021. Jack can significantly influence Jill. On December 10, 2021, Jill declared and paid $1.1 million in dividends. Jill reported a net loss of $7.5 million for the year. What amount of loss should Jack report in its income statement for 2021 relative to its investment in Jill?
1. $1,860,000.
2.$1,575,000.
3.$1,100,000.
4.$1,744,500.
Homework Answers
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As jack Corporation has significant influence over Jill Corporation, it is most likely to use equity method. So, loss reported by Jack = Loss of Jill * ownership percent = 7,500,000*21% = 1,575,000 Option B is the answer |
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