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vampirchik [111]
3 years ago
12

On June 1, 2021, Blue Co. distributed to its common stockholders 200,000 outstanding common shares of its investment in Red Inc.

which is an unrelated party. The book value on Blue's books of Red's $1 par common stock was $2.00 per share. Immediately after the declaration, the market price of Red's stock was $2.50 per share. In its income statement for the year ended June 30, 2021, what amount should Blue report as gain before income taxes on disposal of the stock?
Business
1 answer:
GalinKa [24]3 years ago
7 0

Answer:

Blue Co. should report $100,000 gain.

Explanation:

The difference between the carrying value of shares and Market value of shares is the gain / loss which Blue Co. should report before income taxes on disposal of the stock.

Carrying Value = 200,000 x $2 = $400,000

Market Value = 200,000 x $2.5 = $500,000

Gain = Market Value - Carrying Value

Gain = $500,000 - $400,000

Gain = $100,000

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nirvana33 [79]

Answer: Business profile

Explanation:

Business profile is referred to as or known as the profile that is designed in order to have an overview of the organization, business and their business plan. It tends to provide the readers with quick overview of the business, also including the values and the objectives, so as they tend to get the immediate feel of what they are doing and where they are headed.

7 0
3 years ago
A subsidiary can pay only 50% of its profits to its parent company unless the subsidiary's accumulated retained earnings have be
Aleks [24]

Answer:

False

Explanation:

There is no restriction that prohibits the payment of dividends from a subsidiary to a parent company. The parent company has to report the subsidiary's profit as taxable income, so the subsidiary must pay its dividends to the parent company. To avoid multiple layers of taxation, parent companies can use the dividends-received deduction to reduce their taxes on the dividends received. Then the parent company must itself distribute dividends to its shareholders.

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4 years ago
At the beginning of 2018, Midway Hardware has an inventory of $310,000. Because sales growth was strong during 2018, the owner w
nalin [4]

Answer:

$1,625,000

Explanation:

For computing the purchase amount first we have to determine the cost of goods sold which is shown below;

As we know that

Cost of goods sold = Sales revenue - gross profit

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                               = $2,100,000 - $525,000

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Now the purchase amount is

Cost of goods sold = Beginning inventory + purchase - ending inventory

$1,575,000 = $310,000 + purchase - $360,000

So, the purchase amount is $1,625,000

4 0
3 years ago
Supply curves are created when the data from a
LiRa [457]
Supply curves are created when the data from a supply schedule is graphed. The correct answer is C. 
6 0
4 years ago
During the month, merchandise is sold for $80,500 cash and for $119,000 on account. The cost of goods sold is $101,500. What is
REY [17]
First add two numbers and get the sum and then subtract with the third number and get the different ..so the answer will be C: 98000
5 0
3 years ago
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