On 1 January 2016,Yu Ltd acquired 100 000 shares (30 per cent of the voting interest)in Ping Ltd for $900 000 cash.On 30 June 2016,Ping Ltd announced its earnings per share for the first six months of 2016 at $2.00 per share.On 20 November,Ping Ltd paid dividends to shareholders at $1.20 per share.On 31 December 2016,Ping Ltd announced its earnings per share for 2016 at $3.50 per share (i.e. ,$1.50 additional since 30 June).
-If Yu Ltd used the cost method,what dividend revenue would it record for the year ended 31 December 2016 in respect of its investment in Ping Ltd?

Question

Quizplus · Accepted Answer

Since Yu Ltd used the cost method, it only records dividend revenue when dividends are received. Ping Ltd paid dividends on 20 November, and Yu Ltd owned 30% of the voting interest, so it received 30% of the dividends.

Dividend revenue = 30% x $1.20 per share x 100,000 shares= $36,000 x 3 = $108,000 
Yu Ltd would record $108,000 as dividend revenue for the year ended 31 December 2016.

On 1 January 2016,Yu Ltd Acquired 100 000 Shares (30