Use the following information to solve the following questions:
On January 1, 2020, Abalone Ltd. acquired 30% of Flounder Corp.'s common shares for $ 240,000. During 2020, Flounder reported net income of $ 100,000 and paid total dividends of $ 60,000. Abalone's 30% interest in Flounder gives Abalone the ability to exercise significant influence over their operating and financial policies. During 2021, Flounder reported net income of $ 150,000 and paid total dividends of $ 30,000 on April 1 and $ 40,000 on October 1. On July 1, 2021, Abalone sold half of its shares in Flounder for $ 158,000 cash.
-Before income taxes, what income should Abalone include in its 2020 income statement as a result of this investment?
A) $ 100,000
B) $ 60,000
C) $ 30,000
D) $ 18,000

Question

Quizplus · Accepted Answer

Abalone should recognize its share of Flounder's net income for 2020, which is 30% of $100,000, equaling $30,000.

Use the Following Information to Solve the Following Questions