Milton Company owns 26% interest in the stock of Darcy Corporation. During the year, Darcy declares and pays $23,000 in dividends to Milton, and reports $110,000 in net income. Milton Company will report Equity-method Investment Revenue of:

Question

Quizplus · Accepted Answer

Under the equity method, Milton Company will recognize its share of Darcy Corporation's net income. Milton owns 26% of Darcy, so it will recognize 26% of $110,000, which is $28,600, as Equity-method Investment Revenue. Dividends received are not included in the equity-method investment revenue calculation.

Milton Company Owns 26% Interest in the Stock of Darcy