On January 3, 2011, Roberts Company purchased 30% of the 100,000 shares of commo
ID: 2474515 • Letter: O
Question
On January 3, 2011, Roberts Company purchased 30% of the 100,000 shares of common stock of Thomas Corporation, paying $1,500,000. There was no goodwill or other cost allocation associated with the investment. Roberts has significant influence over Thomas. During 2011, Thomas reported income of $300,000 and paid dividends of $100,000. On January 4, 2012, Roberts sold 15,000 shares for $800,000.
Questions:
What is the gain/loss on the sale of the 15,000 shares?
What is the balance in the investment account after the sale of the 15,000 shares?
Show work please
Explanation / Answer
Answer: $20000 gain
=$800000-((1500000+60000)/30000)*15000)
=$800000-780000
=$20000
Answer:$780000
=1560000-800000+20000
=780000
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