What should ABC report as investment income

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Question - At the beginning of the year, ABC Corp. purchased 40% of the outstanding ordinary shares of an investee. It paid $2,500,000. The net assets of the investee were valued $6,000,000 but was only carried in the books at $5,000,000. The difference is attributable to an equipment that has 5 years remaining useful life. During the year, the investee reported $800,000 net income, paid $500,000 dividends and made upstream sale to ABC resulting to a gross profit of $50,000. ABC still have 30% of the inventory from the upstream sale. What should ABC report as investment income?

Reference no: EM132894469

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