Sandhu Travel Agency Ltd. has 400,000 common shares authorized and 128,000 shares issued on December 31, 2020. On January 2, 2021, Paver Inc. purchased shares of Sandhu Travel Agency for $41 per share. Paver intends to hold these shares as a long-term investment. Paver's accountant prepared a trial balance at December 31, 2021, under the assumption that Paver could not exercise significant influence over Sandhu Travel Agency. Under this assumption, the trial balance included the following accounts and amounts related to the Sandhu investment: Long-term investments $1,376,000 Dividend income 96,000 Unrealized gain on long-term investments 64,000 (F) Assuming that Paver does use the equity method, what amount will it report on its statement of income for 2021 regarding this investment?

Sandhu Travel Agency Ltd. has 400,000 common shares authorized and 128,000 shares issued on December 31, 2020. On January 2, 2021, Paver Inc. purchased shares of Sandhu Travel Agency for $41 per share. Paver intends to hold these shares as a long-term investment. Paver's accountant prepared a trial balance at December 31, 2021, under the assumption that Paver could not exercise significant influence over Sandhu Travel Agency. Under this assumption, the trial balance included the following accounts and amounts related to the Sandhu investment: Long-term investments $1,376,000 Dividend income 96,000 Unrealized gain on long-term investments 64,000 (F) Assuming that Paver does use the equity method, what amount will it report on its statement of income for 2021 regarding this investment?

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter16: Retained Earnings And Earnings Per Share

Section: Chapter Questions

Problem 5MC: Kent Corporation was organized on January 1, 2014. On that date, it issued 200,000 shares of 10 par...

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