Question

On January 1, 2011, Stern Corporation purchased 100 shares of common stock issued by Milstein, Inc. (representing 12 percent of the total shares outstanding) for $ 6,000 and 500 shares of Heifetz Inc. (representing 25 percent of the total shares outstanding) for $ 20,000. Assume that the acquisition cost of each investment equals the book value of the related stockholders’ equity on the records of the investee.
During 2011, Milstein declared and paid cash dividends to Stern of $ 500 and Heifetz declared and paid cash dividends to Stern of $ 1,700. Milstein reported 2011 net income of $ 12,000 and Heifetz reported 2011 net income of $ 15,000. On December 31, 2011, the market value of 100 shares of Milstein was $ 6,450 and the market value of 500 shares of Heifetz was $ 19,720.
Required:
Answer the following questions for both investments:


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  • CreatedSeptember 22, 2015
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