Cullumber, Inc. acquired 20% of Marigold Corporation's voting stock on January 1, 2021 for $930000. During...
Cullumber, Inc. acquired 20% of Marigold Corporation's voting stock on January 1, 2021 for $930000. During 2021, Marigold earned $400000 and paid dividends of $248000. Cullumber's 20% interest in Marigold gives Cullumber the ability to exercise significant influence over Marigold's operating and financial policies. During 2022, Marigold earned $524000 and paid cash dividends of $174000 on April 1 and $174000 on October 1. On July 1, 2022, Cullumber sold half of its stock in Marigold for $684000 cash. What should the gain be on sale of this investment in Cullumber's 2022 income statement?
Homework Answers
Calculate value of investment
| Initial investment | 930000 |
| Add: Net income (2021) (400000*20%) | 80000 |
| Less; Dividend (248000*20%) | -49600 |
| Ending investment 2021 | 960400 |
| Add: Net income (524000*20%) | 104800 |
| Less: Dividend (174000*20%) | -34800 |
| Value of sale | 1030400 |
Value of Half stock = 1030400/2 = 515200
Sale price = 684000
Gain on Sale of stock = 684000-515200 = 168800
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Cullumber, Inc. acquired 20% of Marigold Corporation's voting
stock on January 1, 2021 for $930000. During...
Cullumber, Inc. acquired 20% of Marigold Corporation's voting stock on January 1, 2021 for $930000. During...
Cullumber, Inc. acquired 20% of Marigold Corporation's voting
stock on January 1, 2021 for $930000. During 2021, Marigold earned
$400000 and paid dividends of $248000. Cullumber's 20% interest in
Marigold gives Cullumber the ability to exercise significant
influence over Marigold's operating and financial policies. During
2022, Marigold earned $524000 and paid cash dividends of $174000 on
April 1 and $174000 on October 1. On July 1, 2022, Cullumber sold
half of its stock in Marigold for $684000 cash.
What should...
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stock on January 1, 2021 for $930000. During 2021, Marigold earned
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influence over Marigold's operating and financial policies. During
2022, Marigold earned $524000 and paid cash dividends of $174000 on
April 1 and $174000 on October 1. On July 1, 2022, Cullumber sold
half of its stock in Marigold for $684000 cash.
What should...
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