Using the data presented in BE12.6, assume that Rook Corporation reports under ASPE and has chosen to

Question:

Using the data presented in BE12.6, assume that Rook reports under ASPE and has chosen to account for its investment in Hook Ltd. using the cost model because the shares do not trade in an active market.
In BE 12.6
On January 1, Rook a publicly traded company, purchased 25% of Hook Ltd. common shares for $800,000. At December 26, Hook declared a $40,000 (Rook received its share that day) and reported net income of $80,000. The shares' fair value at December 31 was $840,000.
(a) Record each of the transactions given in BE12-6 under this assumption.
(b) How much revenue would be reported by Rook in this situation?
(c) Explain why this differs from your answer in BE12.6.
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