Desmond Corporation owns 3,500 of the 10,000 outstanding ordinary shares of Wetmore Corporation. During 2014, Wetmore earned £2,400,000 and paid cash dividends of £800,000. How much investment revenue should Desmond report in 2014?

Question

Quizplus · Accepted Answer

Desmond Corporation owns 35% of Wetmore Corporation (3,500 out of 10,000 shares). Therefore, Desmond should report 35% of Wetmore's earnings as investment revenue. 35% of £2,400,000 is £840,000.

Desmond Corporation Owns 3,500 of the 10,000 Outstanding Ordinary Shares