Kim Company acquired 30% of Kourtney Company's voting stock for $200,000 on January 2, 2019. During 2019, Kourtney earned $80,000 and paid dividends of $50,000. Kourtney reported earnings of $100,000 for the six months ended June 30, 2020, and $200,000 for the year ended December 31, 2020. On July 1, 2020, Kim sold half of its stock in Kourtney for $150,000 cash. Kourtney paid dividends of $60,000 on October 1, 2020. In its 2020 income statement, how much should Kim report as gain from the sale of half of its investment?
Kim Company acquired 30% of Kourtney Company's voting stock for $200,000 on January 2, 2019. During 2019, Kourtney earned $80,000 and paid dividends of $50,000. Kourtney reported earnings of $100,000 for the six months ended June 30, 2020, and $200,000 for the year ended December 31, 2020. On July 1, 2020, Kim sold half of its stock in Kourtney for $150,000 cash. Kourtney paid dividends of $60,000 on October 1, 2020. In its 2020 income statement, how much should Kim report as gain from the sale of half of its investment?
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
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Kim Company acquired 30% of Kourtney Company's voting stock for $200,000 on January 2, 2019. During 2019, Kourtney earned $80,000 and paid dividends of $50,000. Kourtney reported earnings of $100,000 for the six months ended June 30, 2020, and $200,000 for the year ended December 31, 2020. On July 1, 2020, Kim sold half of its stock in Kourtney for $150,000 cash. Kourtney paid dividends of $60,000 on October 1, 2020. In its 2020 income statement, how much should Kim report as gain from the sale of half of its investment?
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