Calculate sultans income from the investment

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Reference no: EM132979948

Question: Sultan Corporation pays $500,000 for a 20 percent interest in Chula Corporation on July 1, 2016, when Chula''s capital stock is valued at $700,000, its retained earnings at $500,000, and the book value of Chula''s net assets equals fair value. Additional information about Chula Corporation is given below: a. It paid dividends of $25,000 on March 1, 2016, and $25,000 on September 1, 2016. b. Its net income in 2016 was $150,000 (evenly throughout the year).

REQUIRED Problem

1. Calculate Sultan''s income from the investment if the fair value/cost method is applied Problem

2. Calculate Sultan''s income from the investment if the equity method is applied

Reference no: EM132979948

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