On January 1, 20X4, Calas Company acquired 40% of the outstanding voting stock of Nick Company as a long-term investment. During 20X4, Nick reported net earnings of $10,000 and declared and paid dividends of $4,000. During 20X4, Calas Company should report "Income from investee earnings" of
A) $3,000.
B) $4,000.
C) $2,400.
D) $10,000.

Question

Quizplus · Accepted Answer

Calculation: Income from investee earnings ($4,000) = Investee net income ($10,000) × Ownership percentage (40%).

On January 1, 20X4, Calas Company Acquired 40% of the Outstanding