1 answer

On January 1, 2009, Halley Company acquired 8 percent of the outstanding common stock of Ghosh...

Question:

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:


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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