On January 1, Year 1, ANT Ltd. invested $400,000 in cash for a30 percent interest in TAM
Question:
On January 1, Year 1, ANT Ltd. invested $400,000 in cash for a30 percent interest in TAM Inc. As a part of the investment, ANT and the other shareholder in TAM signed an agreement under which the two shareholders had joint control over TAM. The acquisition differential on ANT’s 30 percent investment was $50,000. It pertained entirely to one of TAM’s patents, which had a remaining useful life of five years at the date of the investment by ANT. During Year 1, TAM reported net income of $170,000 and paid dividends of $100,000. ANT reports its investment in TAM using the equity method.
How much will ANT report as investment income from TAM for the year ended December 31, Year 1?
A. $21,000
B. $30,000
C. $41,000
D. $51,000
Modern Advanced Accounting in Canada
ISBN: 978-1259087554
7th edition
Authors: Hilton Murray, Herauf Darrell