Answer:
Income for investee during the year ended December 31th 2019: $ 17,200
Explanation:
Purchase value 525,000
Equity proportion: 1,500,000 30% = (450,000)
Goodwill 75,000
Transactions during the year:
income 60,000 x 30% = 18,000
dividends 15,000 x 30% = (4,500)
unrealized profit 2018:
30,000 = cost (1.25)
30,000 / 1.25 = 24,000
gross profit 6,000
unrealized gain: 6,000 x 30% = (1,800)
unrealized profit 2019:
40,000 = cost (1.25)
40,000/1.25 = cost
cost = 32,000
gross profit: 40,000 - 32,000 = 8,000
proportion of unrealized gain:
8,000 x 30% = (2,400)
profit for 2018 realized 1,800
net adjustment 600
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<u>income from investee:</u>
18,000 - 600 (net unrealized gain) = 17,200
