On January 1, 2009, Halley Company acquired 8 percent of the outstanding common stock of Ghosh...
On January 1, 2009, Halley Company acquired 8 percent of the outstanding common stock of Ghosh Corporation for $650,000. Halley appropriately uses the cost method to account for its investment in Ghosh. Ghosh reported net income and paid dividends for the years ended 2009, 2010, and 2011, as follows:
|
Year |
Net Income |
Dividends |
|
2009 |
$100,000 |
$70,000 |
|
2010 |
$70,000 |
$70,000 |
|
2011 |
$30,000 |
$70,000 |
Based on the above information the amount of income related to its investment in Ghosh to be reported by Halley for the year 2010 is:
| a |
$5,600 |
|
| b. |
$10,500 |
|
| c. |
$70,000 |
|
| d. |
$8,000 |
|
| e. |
None of the above |
Homework Answers
Under the cost method of accounting for investment, and distribution of profit is recorded as income from the investment.
Based on the above information the amount of income related to its investment in Ghosh to be reported by Halley for the year 2010 is:$70000
Therefore COrrect Option Is "c"
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On January 1, 2009, Halley Company acquired 8 percent of the
outstanding common stock of Ghosh...
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