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Investment revenue

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Stone Co. owns 4,000 of the 10,000 outstanding shares of Maye Corp. common stock. During 2007, Maye earns $120,000 and pays cash dividends of $40,000.
Stone should report investment revenue for 2007 of how much?

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The solution explains how to calculate the amount of investment revenue.

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Since Stone Co. owns 4,000/10,000=40% of the shares, it must use the equity method of accounting. Under the equity ...

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