On January 1, 2016, Rod Corporation purchased 40% of the outstanding stock of Alamo Corporation for $480,000. Net income reported by Alamo for 2016 was $210,000. Dividends declared and paid by Alamo during 2016 were $40,000. The amount of investment revenue that Rod should recognize for 2016 is:

Question

Quizplus · Accepted Answer

Rod Corporation should recognize 40% of Alamo's net income as investment revenue, which is 40% of $210,000, equaling $84,000.

On January 1, 2016, Rod Corporation Purchased 40% of the Outstanding