Ziegler Corporation purchased 25,000 shares of common stock of the Sherman Corporation for $40 per share on January 2, 2014. Sherman Corporation had 100,000 shares of common stock outstanding during 2015, paid cash dividends of $90,000 during 2015, and reported net income of $300,000 for 2015. Ziegler Corporation should report revenue from investment for 2015 in the amount of

Question

Quizplus · Accepted Answer

Ziegler Corporation purchased 25,000 out of 100,000 total shares of Sherman Corporation, giving them a 25% ownership in the company. Therefore, Ziegler is entitled to 25% of Sherman's net income and dividends. 
25% of Sherman's net income of $300,000 is $75,000. 
25% of Sherman's dividends of $90,000 is $22,500. 
Therefore, Ziegler Corporation should report revenue from investment in the amount of $75,000 ($22,500 + $52,500).

Ziegler Corporation Purchased 25,000 Shares of Common Stock of the Sherman