On January 1, 2008, Rider Corporation purchased 30% of the outstanding stock of Arapahoe Corporation for $770,000. Net income reported by Arapahoe Corporation for 2008 was $120,000. Dividends paid by Arapahoe Corporation during 2008 were $70,000. The amount of investment revenue that Rider should recognize for 2008 is:

Question

Quizplus · Accepted Answer

Rider Corporation should recognize investment revenue based on its share of Arapahoe's net income. With a 30% ownership, Rider's share of Arapahoe's $120,000 net income is 30% of $120,000, which equals $36,000.

On January 1, 2008, Rider Corporation Purchased 30% of the Outstanding