Suppose ABCD's stock price is currently $50. In the next six months it will either fall to $40 or rise to $60. What is the curre
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Answer:
Revenue due to investment in Dubro = $22,000
Explanation:
In the given case, revenue to be recorded will be based on calculation as follows:
Since investment in equity is 40% of total share, equity method will be used.
In such method all income share in equity and preference dividend will form part of income for the current year.
Dividend = $10,000 20% as invested in preference capital.
= $2,000
Share in income = $50,000 40% as invested in equity = $20,000
Note: Dividend will be deducted from net income as net income for equity
Net income - Dividend = $60,000 - $10,000 = $50,000
Thus, net share of income = $2,000 + $20,000 = $22,000