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 2011 is:
Homework Answers
Solution:
amount of income related to its investment in Ghosh to be reported by Halley for the year 2011 is = Amount of dividend received
= $70,000*8% = $5,600
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On January 1, 2009, Halley Company acquired 8 percent of the
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