On december 31 2010 the fair value of the ranger stock, Ask an Expert

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On January 2, 2010, Howdy Doody Corporation purchased 12% of Ranger Corporation's common stock for $50,000 and classified the investment as available for sale. Ranger's net income for the years ended December 31, 2010 and 2011, were $10,000 and $50,000, respectively. During 2011, Ranger declared and paid a dividend of $60,000. There were no dividends in 2010. On December 31, 2010, the fair value of the Ranger stock owned by Howdy Doody had increased to $70,000. How much should Howdy Doody show in the 2011 income statement as income from this investment?

A. $20,000

B. $27,200

C. $7,200

D. $26,000

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9402393

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