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mojhsa [17]
3 years ago
12

On July 1, 1992, Denver Corp. purchased 3,000 shares of Eagle Co.'s 10,000 outstanding shares of common stock for $20 per share.

On December 15, 1992, Eagle paid $40,000 in dividends to its common stockholders. Eagle's net income for the year ended December 31, 1992, was $120,000, earned evenly throughout the year. In its 1992 income statement, what amount of income from this investment should Denver report?
Business
1 answer:
blsea [12.9K]3 years ago
4 0

Answer:

Amount reported in Income Statement from investment in Eagle Co. = $18,000

Explanation:

Shares purchase date = 1 July 1992

Number of shares = 3,000

Total shares = 10,000

Percentage of holding = 3,000/10,000 = 30%

Cost of shares = 3,000 \times $20 = $60,000

Provided dividend received on Dec 15 1992

That is dividend for the year = $40,000

Dividend per share = $40,000/10,000 = $4 per share

Dividend on 3,000 shares = 3,000 \times $4 = $12,000

This will be deducted from cost as dividend received from a company in which share holding is 20% or more than equity method is applied and thus, cost will be $60,000 - $12,000 = $48,000

Further provided Eagle Co's income for the year = $120,000

Shares purchased and held for 6 months

Share of income = 120,000\: \times \: \frac{3,000}{10,000}\: \times\: \frac{6}{12} = 18,000

This shall be added to cost and also the income statement, of the Denver Corp.

Carrying value of Eagle's Shares = $48,000 + $18,000 = $66,000

Final Answer

Amount reported in Income Statement from investment in Eagle Co. = $18,000

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Answer: If you asked the truth-guard, the truth-guard would tell you that the liar-guard would point to the door that leads to death. If you asked the liar-guard, the liar-guard would tell you that the truth-guard would point to the door that leads to death. Therefore, no matter who you ask, the guards tell you which door leads to death, and therefore you can pick the other door.

Explanation:

5 0
3 years ago
Edward Dorsey is a part-time employee, and during the biweekly pay period he earned $395. In addition, he is being paid a bonus
Nastasia [14]

Answer

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Explanation  

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6 0
3 years ago
A firm that has recently experienced an enormous growth rate is seeking to lease a small plant in Memphis, TN; Biloxi, MS; or Bi
azamat

Answer:

Memphis $170,000

Biloxi $160,000

Birmingham $175,000

Explanation:

Preparation of an economic analysis of the three locations

Memphis economic analysis using this formula.

Economic analysis=(Building, equipment, administration costs+Increased transportation costs+(Expected volume *Labor and materials per units)

Let plug in the formula

Memphis Economic Analysis = $40,000 + $50,000 + (10,000 units *$8/unit )

Memphis Economic Analysis = $40,000 + $50,000 + $80,000

Memphis Economic Analysis = $170,000

Therefore Memphis Economic Analysis is $170,000

Preparation of Biloxi Economic Analysis

Biloxi Economic Analysis = $60,000 + $60,000 + (10,000 units *$4/unit )

Biloxi Economic Analysis = $60,000 + $60,000 + $40,000

Biloxi Economic Analysis = $160,000

Therefore Biloxi Economic Analysis is $160,000

Preparation of Birmingham Economic Analysis

Birmingham Economic Analysis = $100,000 + $25,000 + (10,000 units *$5/unit )

Birmingham Economic Analysis = $100,000 + $25,000 + $50,000

Birmingham Economic Analysis = $175,000

Therefore Birmingham Economic Analysis is $175,000

Therefore the summary of the economic analysis of the three locations are:

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Birmingham $175,000

5 0
3 years ago
The controller of Crane Industries has collected the following monthly expense data for use in analyzing the cost behavior of ma
Anna [14]

Answer:

Variable cost per unit= $6.6 per unit

Explanation:

Giving the following information:

January: $2,880 330

February: $3,180 380

March: $3,780 530

April: $4,680 660

May: $3,380 530

June: $5,520 730

To calculate the unitary variable cost, we need to use the following formula:

Variable cost per unit= (Highest activity cost - Lowest activity cost)/ (Highest activity units - Lowest activity units)

Variable cost per unit= (5,520 - 2,880) / (730 - 330)= $6.6 per unit

4 0
3 years ago
Miller owns a personal residence with a fair market value of $380,900 and an outstanding first mortgage of $304,720, which was u
Romashka [77]

Answer:

$304,720

Explanation:

According to the IRS, qualified principal residence indebtedness may include:

1)  Debt incurred in order to purchase, build or improve your house or main residence, and the debt is secured by the house or principal residence (mortgage).

Or

2) Any house debt in (1) that is refinanced in order to improve, build or purchase something of your house or principal residence, e.g. you refinance your mortgage in order to build a swimming pool. The loan balance cannot exceed the original mortgage.

A fishing boat is not considered a home improvement, so the equity loan is not considered qualified residence indebtedness.

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