Exhibit 13-1 On January 1, 2014, Oak Corporation paid $900,000 for 80,000 shares of Beech Company's common stock, which represents 35% of Beech's outstanding common stock. Beech reported income of $300,000 and paid a cash dividend of $100,000 during 2014.
-Refer to Exhibit 13-1. Oak should report income from the investment in Beech Company for 2014 of

Question

Quizplus · Accepted Answer

Oak Corporation owns 35% of Beech Company's outstanding common stock, so it should reflect this ownership percentage in its income from the investment. Beech reported income of $300,000, so Oak's share of that would be $105,000 (35% x $300,000). The cash dividend paid by Beech is not relevant to Oak's income from the investment. Therefore, the correct answer is Option C.

Exhibit 13-1 on January 1, 2014, Oak Corporation Paid $900,000