Question: Assume that Fleetwood Inc. purchased 40% of the voting stock of Mac Corporation on January 1, 2020, for ($ 100,000), an amount equal to (40

Assume that Fleetwood Inc. purchased 40\% of the voting stock of Mac Corporation on January 1, 2020, for $\$ 100,000$, an amount equal to $40 \%$ of Mac's book value. Assume that the fair value and book value of all net assets of Mac were the same at that time. During the year, Fleetwood Inc. debited the Investment account for $\$ 12,000$ and credited the Investment account for $\$ 4,000$. The ending balance of Fleetwood's Investment account is $\$ 108,000$ at December 31, 2020. Assume that Fleetwood Inc. has significant influence over Mac Corporation.

Required

a. What did Mac Corporation report as net income for the year 2020? What is Fleetwood's share of Mac Corporation's net income for the year?

b. What did Mac Corporation report as dividends for the year 2020? What is Fleetwood's share of Mac Corporation's dividends for the year?

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