QUESTION 7 S started a new business on Jan 1, 2018. P purchased 30% stock of S on Jan 1 2018 for $200,000. The net income and dividends paid by S for 2018 and 2019 am s follows Year 2018 2019 Net income of S 60,000 40,000 Dividends paid by S 40,000 70,000 Using the cost method, the increase in the net income of P related to its investment in S for the year 2019 will be O $21,000 O $14,000 $12,000 $18,000
QUESTION 7 S started a new business on Jan 1, 2018. P purchased 30% stock of S on Jan 1 2018 for $200,000. The net income and dividends paid by S for 2018 and 2019 am s follows Year 2018 2019 Net income of S 60,000 40,000 Dividends paid by S 40,000 70,000 Using the cost method, the increase in the net income of P related to its investment in S for the year 2019 will be O $21,000 O $14,000 $12,000 $18,000
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
ChapterA2: Investments
Section: Chapter Questions
Problem 23E
Related questions
Question
1.
![QUESTION 7
S started a new business on Jan 1, 2018. P purchased 30% stock of S on Jan 1 2018 for $200,000. Thn net income and dividends paid by S for 2018 and 2019 am as follows
Year
2018
2019
Net Income of S
60,000
40.000
Dividends paid by S
40,000
70,000
Using the cost method, the increase in the net income of P related to its investment in S for the year 2019 will be
O s21,000
O $14,000
$12,000
O $18,000
QUESTION 8
In the fair value method, if the invetsee reports any extraordinary income, the investor also reports his share of those extraordinary Incomes in its books.
O True
O False](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc959ddc1-b199-4bb3-9940-9689ce245866%2F9b4b5112-e435-4bba-b3bb-4f9fbfae981e%2Ftbera7_processed.jpeg&w=3840&q=75)
Transcribed Image Text:QUESTION 7
S started a new business on Jan 1, 2018. P purchased 30% stock of S on Jan 1 2018 for $200,000. Thn net income and dividends paid by S for 2018 and 2019 am as follows
Year
2018
2019
Net Income of S
60,000
40.000
Dividends paid by S
40,000
70,000
Using the cost method, the increase in the net income of P related to its investment in S for the year 2019 will be
O s21,000
O $14,000
$12,000
O $18,000
QUESTION 8
In the fair value method, if the invetsee reports any extraordinary income, the investor also reports his share of those extraordinary Incomes in its books.
O True
O False
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
![Cornerstones of Financial Accounting](https://www.bartleby.com/isbn_cover_images/9781337690881/9781337690881_smallCoverImage.gif)
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning
![Intermediate Accounting: Reporting And Analysis](https://www.bartleby.com/isbn_cover_images/9781337788281/9781337788281_smallCoverImage.jpg)
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
![Cornerstones of Financial Accounting](https://www.bartleby.com/isbn_cover_images/9781337690881/9781337690881_smallCoverImage.gif)
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning
![Intermediate Accounting: Reporting And Analysis](https://www.bartleby.com/isbn_cover_images/9781337788281/9781337788281_smallCoverImage.jpg)
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
![Fundamentals Of Financial Management, Concise Edi…](https://www.bartleby.com/isbn_cover_images/9781337902571/9781337902571_smallCoverImage.jpg)
Fundamentals Of Financial Management, Concise Edi…
Finance
ISBN:
9781337902571
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
![Financial Reporting, Financial Statement Analysis…](https://www.bartleby.com/isbn_cover_images/9781285190907/9781285190907_smallCoverImage.gif)
Financial Reporting, Financial Statement Analysis…
Finance
ISBN:
9781285190907
Author:
James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:
Cengage Learning