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How much income should AU report from its investment

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Question - On January 1, 2019, AU Company purchased 15% of the common shares of BU Corporation for $40,000, giving AU significant influence over BU. At that time, the shareholders' equity of BU had a book value of $200,000 and the identifiable net assets had fair values that were equal to their book values except for equipment, which was undervalued by $8,000 relative to their current fair values. This equipment had a remaining useful life of 4 years. BU's net income during 2019 was $60,000. BU paid dividends of $50,000 on its common shares during 2019. As at December 31, 2019, it was determined that there had been no impairment of BU's shares. How much income should AU report from its investment in BU for 2019?

Reference no: EM132998632

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