Question

Gaw Company owns 15% of the common stock of Trace Corporation and used the fair-value method to account for this investment. Trace reported net income of $110,000 for 2018 and paid dividends of $60,000 on October 1, 2018. How much income should Gaw recognize on this investment in 2018?

Answer 1

Answer:

The income should Gaw recognize on this inverstment is $ 16500.

Explanation:

The net income should recognize on inverstment =  $ 110000×15%

                                                                                   = $ 16500

therefore, the income should Gaw recognize on this inverstment is $ 16500.