Use the following information to answer the question(s)below.
Bird Corporation purchased an 80% interest in Brush Corporation on July 1,2010 at its book value,and on January 1,2011 its Investment in Brush account was $300,000,equal to its book value.Brush's net income for 2011 was $99,000 (earned uniformly);no dividends were declared.On March 1,2011,Bird reduced its interest in Brush by selling a 20% interest,one-fourth of its investment,for $84,000.
-If Bird uses a "beginning-of-the-year" sale assumption,its gain on sale and income from Brush for 2011 will be

Question

Quizplus · Accepted Answer

C)
Selling price $84,000
Book value of interest sold
$300,000 × (20% / 80%)= 75,000
Gain on sale $9,000
Income from Brush
$99,000 × (80% - 20%)= $59,400

Use the Following Information to Answer the Question(s)below