Description of this paper

How much of Cook's net income did Mehan report for the year 2012

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solution


Question

On January 1, 2010, Mehan, Incorporated purchased 15000 shares of Cook Company for $150000 giving Mehan a 15% ownership of Cook. On January 1, 2011 Mehan purchased an additional 25000 shares (25%) of Cook for $300000. This last purchase gave Mehan the ability to apply significant influence over Cook. The book value of Cook on January 1, 2010, was $1000000. The book value of Cook on January 1, 2011, was $1150000. Any excess of cost over book value for this second transaction is assigned to a database and amortized over five years.;net income 2010=200000 div=50000;net income 2011=225000 div=50000;net income 2012=250000 div=60000;On April 1, 2012, just after its first dividend receipt, Mehan sells 10000 shares of its investment.;How much of Cook's net income did Mehan report for the year 2012?;A $61750;B $81250;C $72500

 

Paper#20795 | Written in 18-Jul-2015

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