Reference no: EM132778905

Rich, Inc. acquired 30% of Doane Corporation's voting stock on January 1, 2014 for $800,000. During 2014, Doane earned $320,000 and paid dividends of $200,000. Rich's 30% interest in Doane gives Rich the ability to exercise significant influence over Doane's operating and financial policies. During 2015, Doane earned $400,000 and paid dividends of $120,000 on April 1 and $120,000 on October 1. On July 1, 2015, Rich sold half of its stock in Doane for $528,000 cash.

Question 1: Before income taxes, what amount should Rich include in its 2014 income statement as a result of the investment?

Question 2: The carrying amount of this investment in Rich's December 31, 2014 balance sheet should be

Question 3: What should be the gain on sale of this investment in Rich's 2015 income statement