Explore BrainMass

Explore BrainMass

    Income Recognition

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    1. 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?
    A) $16,500
    B) $ 9,000
    C) $25,500
    D) $ 7,500
    E) $50,000

    © BrainMass Inc. brainmass.com June 3, 2020, 8:05 pm ad1c9bdddf

    Solution Preview

    Under the fairvalue method, the investment will be treated as available for sale. In this ...

    Solution Summary

    The solution explains the income recognition using the fair value method