Kimm, Inc. acquired 30% of Carne Corp's voting stock on January 1, 2007 for $400,000. During 2007,

Question:

Kimm, Inc. acquired 30% of Carne Corp's voting stock on January 1, 2007 for $400,000. During 2007, Carne earned $160,000 and paid dividends of $100,000. Kimm's 30% interest in Carne gives Kimm the ability to exercise significant influence over Carne's operating and financial policies. During 2008, Carne earned $200,000 and paid dividends of $60,000 on April 1 and $60,000 on October 1. On July 1, 2008, Kimm sold half of its stock in Carne for $264,000 cash.
a. Before income taxes, what amount should Kimm include in its 2007 income statement as a result of the investment?
b. The carrying amount of this investment in Kimm's December 31, 2007 should be?
c. What should be the gain on sale of this investment in Kimm's 2008 income statement?
Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...