90000 65000 25000 5 kimm inc acquired 30 of carne

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= 90,000 – 65,000 = 25,000 5. 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. Before income taxes, what amount should Kimm include in its 2007 income statement as a result of the investment? a. $160,000. b. $100,000. c. $48,000. d. $30,000. Income statement effect under the equity method 30% * 160,000 (net income of investee) = 48,000
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Part II – 1 Webster Inc. carries the following marketable equity securities on its books at December 31, 2007, and 2008. All securities were purchased during 2007 and there were no beginning balances in any market adjustment accounts. One of trading securities, X Company’s stock, was sold during 2008. Trading Securities: Market Market Cost December 31, 2007 December 31, 2008 V Company $ 50,000 $ 76,000 $ 40,000 W Company 26,000 40,000 40,000 X Company 70,000 60,000 Total $146,000 $1 7 6,000 $ 8 0,000 Available-for-Sale Securities: Y Company $420,000 $360,000 $250,000 Z Company 100,000 120,000 15
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