Use the information below to answer the following questions:
On 1 January 2012, Sky-High Ltd acquired 100 000 shares (30% of the voting interest) in Down Ltd for $600 000 cash. On 30 June 2012, Down Ltd announced its earnings per share for the first 6 months of 2012 at $1.50 per share. On 20 November, Down Ltd paid dividends to shareholders at $0.90 per share. On 31 December 2012, Down Ltd announced its earnings per share for 2012 at $2.80 per share (i.e., $1.30 additional since 30 June).
-If Sky-High Ltd used the cost basis,what dividend revenue did it record for the year ended 31 December 2012 in respect of its investment in Down Ltd?
A) nil
B) $90 000
C) $190 000
D) $280 000.

Question

Quizplus · Accepted Answer

Sky-High Ltd would record dividend revenue based on the dividends paid by Down Ltd. With 100,000 shares and a dividend of $0.90 per share, the dividend revenue would be 100,000 shares * $0.90 = $90,000.

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