Gaw Company owns 15% of the common stock of Teal Corporation and used the fair-value method to account for this investment. Teal reported net income of $110,000 for 2002 and paid dividends of $60,000 on October 1, 2002. How much income should Gaw recognize on this investment in 2002?
B) $ 9,000
D) $ 7,500
E) $50,000© BrainMass Inc. brainmass.com June 3, 2020, 7:02 pm ad1c9bdddf
Under the fair value method, only the dividends received are counted ...
The solution explains the fair-value method of accounting for investments. It includes brief calculations and the answer.