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Mina currently has40,000 shares outstanding. During the year, Mina had net income of $200,000 and paid $160,000 in dividends. At the beginning of the year, there was a balance of $150,000 in XYZ’s equity method investment in Mina Corporation account. At the end of the year, the balance in this account should be
A. $110,000
B. $150,000
C. $160,000
D. $240,000
The correct option is C)160,000
The XYZ " s investment is on equity method basis so that it total investment will increase by profit of $ (200,000*0.25=50,000) total value of investment after announcement of net income $(150,000+50,000=200,000) and upon payment of dividend the investment will be reduce by share of dividend $(160,000*0.25=40,000) . The total value of investment will be at end of the year will be $(200,000-40,000=160,000).. The net affect on the investment is $10,000 increment in total value at the end of the year.
$200000-$160000=$40000
$40000/40000 shares=Share of $1/-
10000shares @$1=$10000
Opening Bal$150000+$10000=$160000 is answer
c) Is the correct answer .................
the answer is C
$200.000 - $160.000 = $40.000
$40.000/40.000 shares = $1
$1 *10000 shares = $10.000
beginning balance + $10.000 = $160.000
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