Use the following information for questions 97 and 98.
Harrison Company owns 20,000 of the 50,000 outstanding shares of Taylor, Inc. common stock. During 2015, Taylor earns $1,000,000 and pays cash dividends of $800,000.
-Harrison should report investment revenue for 2015 of

Question

Quizplus · Accepted Answer

Harrison Company owns 40% (20,000/50,000) of Taylor, Inc., which means it has significant influence and should use the equity method. Under this method, Harrison reports 40% of Taylor's earnings as investment revenue, which is $400,000 (40% of $1,000,000).

Use the Following Information for Questions 97 and 98