Exhibit 13-1
On January 1, 2017, Oak Corporation paid $900,000 for 87,500 shares of Beech Company's common stock, which represents 35% of Beech's outstanding common stock. Beech reported income of $300,000 and paid a cash dividend of $100,000 during 2017.
-Refer to Exhibit 13-1. Oak should report income from the investment in Beech Company for 2017 of

Question

Quizplus · Accepted Answer

Oak Corporation owns 35% of Beech Company, which suggests significant influence over Beech. Therefore, Oak uses the equity method to account for this investment. Under the equity method, Oak recognizes its share of Beech's income, which is 35% of $300,000, equaling $105,000.

Exhibit 13-1 On January 1, 2017, Oak Corporation Paid $900,000 for 87,500