Photo Finish Corporation bought a 40% interest in the voting stock of Click It Corporation's $1 par value common stock for $20 million (2 million shares at a $10 market price)on March 31,2011.On December 31,2011,Click It paid a $1 million cash dividend declared earlier in 2011 and reported net income for the year ended 2011 of $10 million.On December 31,2011,Click It's stock was trading at $11.50 per share.At what amount will the Click It investment be reported on Photo Finish's December 31,2011 balance sheet?
A)$20,000,000
B)$23,000,000
C)$23,600,000
D)$24,000,000

Question

Quizplus · Accepted Answer

Click It investment ($23.6 million) = March 31, 2011 cost ($20 million) + Investment income [Investee net income ($10 million) F1F1F1S1F1F1F10 Ownership percentage (40%)] - Proportionate share of investee dividends ($1 million F1F1F1S1F1F1F10 40%)

Photo Finish Corporation Bought a 40% Interest in the Voting