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mr_godi [17]
2 years ago
15

On June 1, 2018, Blue Co. distributed to its common stockholders 180,000 outstanding common shares of its investment in Red, Inc

. an unrelated party. The book value on Blue’s books of Red's $1 par common stock was $1.20 per share. Immediately after the declaration, the market price of Red's stock was $3.40 per share. In its income statement for the year ended June 30, 2018, what amount should Blue report as gain before income taxes on disposal of the stock? (Do not round your intermediate calculation.)
Business
1 answer:
faltersainse [42]2 years ago
8 0

Answer:

Blue Co. Shall report $396,000 as gain before income taxes on disposal of the stock.

Explanation:

Book value per share of Red Inc = $1.20 per share

As the value of share is revised just after the declaration but before distribution there will be gain on sale of investment.

Net gain = Sale price - Book value

= $3.40 - $1.20 per share = $2.2 per share

Total gain for the year end on June 30 will be

= $2.2 per share X 180,000 shares = $396,000 shares

Thus Blue Co. Shall report $396,000 as gain before income taxes on disposal of the stock.

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A. State and describe the concept that leads to "conflict of goals between a firm's managers and its shareholders. Give a modern
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Answer: See explanation

Explanation:

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2 years ago
Select the correct text in the passage.
tia_tia [17]

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the answer is the first sentence and the last

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You have just taken out an installment loan for $100,000. Assume that the loan will be repaid in 12 equal monthly installments o
Rama09 [41]

Answer:

$7,757.16

Explanation:

rate of interest = 2%

Rate(12, 9456-100000)

Rate(nper,pmt,pv)

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Item 3Item 3 Cutter Enterprises purchased equipment for $87,000 on January 1, 2018. The equipment is expected to have a five-yea
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Answer:

$27,400 and $59,600

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