Patricia Company owns 25% of Sandra Company and accounts for the investment on the equity basis and does not consolidate.At the beginning of 2012,the investment in Sandra Company was $180,000.In 2012,Sandra Company earned $70,000 and paid dividends of $10,000.Required:
a.How much will Patricia Company report as equity in earnings of Sandra Company in 2012?
b.How much cash flow will Patricia Company receive from Sandra Company in 2012?
c.Why does recognition of equity earnings cause problems in analysis?

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The Answer of Patricia Company owns 25% of Sandra Company and accounts for the investment on the equity basis and does not consolidate.At the beginning of 2012,the investment in Sandra Company was $180,000.In 2012,Sandra Company earned $70,000 and paid dividends of $10,000.Required:
a.How much will Patricia Company report as equity in earnings of Sandra Company in 2012?
b.How much cash flow will Patricia Company receive from Sandra Company in 2012?
c.Why does recognition of equity earnings cause problems in analysis?

Patricia Company Owns 25% of Sandra Company and Accounts for the Investment