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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