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Dodge, Incorporated acquires 15% of Gates Corporation on January
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Dodge, Incorporated acquires 15% of Gates Corporation on January 1, 2011, for $105,000 when the book value of Gates was $600,000. During 2011 Gates reported net income of $150,000 and paid dividends of $50,000. On January 2, 2012, Dodge purchased an additional 25% of Gates for $200,000. Any excess cost over book value is attributable to goodwill with an indefinite life. The fair-value method was used during 2011 but Dodge has deemed it necessary to change to the equity method after the second purchase. During 2012 Gates reported net income of $200,000 and reported dividends of $75,000. The income reported by Dodge for 2012 with regard to the Gates investment is
A. $80,000
B. $30,000
C. $50,000
D. $15,000
E. $75,000
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[Solved] Dodge, Incorporated acquires 15% of Gates Corporation on January
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- Submitted On 02 Oct, 2017 04:45:14
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