An investor company owns 40% of the outstanding common stock of an investee company, which allows the investor to exercise significant influence over the investee. The Equity Investment was reported at $650,000 as of the end of the previous year. During the year, the investor received dividends of $70,000 from the investee. The investee reports the following income statement for the year:

Revenues		$2,300,000
Expenses		1,800,000
Net income		500,000
Other comprehensive income		100,000
Comprehensive income		$600,000

a. How much equity income should the investor report in its net income (i.e., as part of the current year income statement)?

b. What amount should the investor report for the Equity Investment in its balance sheet at the end of the year?

Answer rating: 100% (QA)

answer a Equity income to be reported 200000 500000... View the full answer