Calculate income for a midyear investment Car Corporation pays $600,000 for a 30 percent interest in

Calculate income for a midyear investment

Car Corporation pays $600,000 for a 30 percent interest in Med Corporation on July 1, 2011, when the book value of

Med’s identifiable net assets equals fair value. Information relating to Med follows (in thousands):

December 31, 2010

December 31, 2011

Capital stock, $1 par

$ 600

$ 600

Retained earnings

400

500

Total stockholders’ equity

$1,000

$1,100

Med’s net income earned evenly throughout 2011

$200

Med’s dividends for 2011 (paid $50,000 on

March 1 and $50,000 on September 1)

$100

REQUIRED: Calculate Car’s income from Med for 2011.

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