On January 1,2014,Comas Corporation acquired Partly,Inc.as a long-term investment for $250,000 (a 30 percent common stock interest in Partly).On that date,Partly had net assets with a book value and current market value of $800,000.During 2014,Partly reported net income of $85,000 and declared and paid cash dividends of $20,000.What is the maximum amount of income that Comas should report from this investment for 2014?

Question

Quizplus · Accepted Answer

Comas should report their share of Partly's net income as investment income. Since Comas owns 30% of Partly, they would report 30% of Partly's net income of $85,000, which is $25,500.

On January 1,2014,Comas Corporation Acquired Partly,Inc