Company P acquired 30% of Company S's common stock on January 1, 20X8, for $100,000.Company P's 30% interest constitutes significant influence.There is no excess of cost over book value.During 20X8, Company S earned $40,000 and paid dividends of $25,000.During 20X9, Company S's $50,000 income was earned evenly, and the company paid dividends of $15,000 on April 1 and $15,000 on October 1.On July 1, 20X9, Company P sold half of its interest in Company S for $66,000 cash; thus, Company P no longer had significant influence The gain on the sale of the investment in Company P's 20X9 income statement should be ____.
A)$16,000
B)$13,700
C)$12,250
D)$10,000

Question

Company P acquired 30% of Company S's common stock on January 1, 20X8, for $100,000.Company P's 30% interest constitutes significant influence.There is no excess of cost over book value.During 20X8, Company S earned $40,000 and paid dividends of $25,000.During 20X9, Company S's $50,000 income was earned evenly, and the company paid dividends of $15,000 on April 1 and $15,000 on October 1.On July 1, 20X9, Company P sold half of its interest in Company S for $66,000 cash; thus, Company P no longer had significant influence The gain on the sale of the investment in Company P's 20X9 income statement should be ____.
A)​$16,000
B)​$13,700
C)​$12,250
D)​$10,000

Quizplus · Accepted Answer

The Answer of Company P acquired 30% of Company S's common stock on January 1, 20X8, for $100,000.Company P's 30% interest constitutes significant influence.There is no excess of cost over book value.During 20X8, Company S earned $40,000 and paid dividends of $25,000.During 20X9, Company S's $50,000 income was earned evenly, and the company paid dividends of $15,000 on April 1 and $15,000 on October 1.On July 1, 20X9, Company P sold half of its interest in Company S for $66,000 cash; thus, Company P no longer had significant influence The gain on the sale of the investment in Company P's 20X9 income statement should be ____.
A)​$16,000
B)​$13,700
C)​$12,250
D)​$10,000

Company P Acquired 30% of Company S's Common Stock on January