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ACC 557
ACC 557
Wise Company owns 30% interest in the stock of Dark Corporation. During the year, Dark pays $20,000 in dividends to Wise, and reports $200,000 in net income. Wise Company’s investment in Dark will increase Wise’s net income by
On January 1, 2013, Audrey Corp. paid $800,000 for 100,000 shares of Off Company’s common stock, which represents 40% of Off’s outstanding common stock. Off reported net income of $200,000 and paid cash dividends of $60,000 during 2013. Audrey should report the investment in Off Company on its December 31, 2013, balance sheet at:
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$856,000
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$824,000
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$800,000
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$744,000
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Corporations invest in other companies for all of the following reasons except to
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generate earnings.
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meet strategic goals.
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increase trading of the other companies’ stock.
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house excess cash until needed.
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1) Dayton Corporation purchased 1,000 shares of Kart common stock at $77 per share plus $2,000 brokerage fees as a short-term investment. The shares were subsequently sold at $80 per share less $3,400 brokerage fees. The cost of the securities purchased and gain or loss on the sale were
Cost
Gain or Loss
$79,000
$2,400 loss
$77,000
$1,400 loss
$77,000
$3,000 gain
$79,000
$2,000 gain
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