Question

Harrison Company owns 20,000 of the 50,000 outstanding shares of Taylor, Inc. common stock. During 2018, Taylor earns $1,200,000 and pays cash dividends of $960,000. Harrison should report investment revenue for 2018 of:
Group of answer choices:
A. $96,000
B. $480,000.
C. $0
D. $384,000.

Answer 1

Answer:

B. $480,000

Explanation:

The computation of investment revenue is shown below:

= Earnings × own shares ÷ outstanding shares

=- $1,200,000 × 20,000 shares ÷ 50,000 shares

= $480,000

Simply we do the proportion depend on earnings and based on the number of shares so that the correct amount can come.

All other information which is given is not relevant. Hence, ignored it