Reference no: EM132819655

Question - Rich, Inc. acquired 40% of Doane Corporation's voting stock on January 1, 2021 for $1,200,000. During 2021, Doane earned $400,000 and paid dividends of $250,000. Rich's 40% interest in Doane gives Rich the ability to exercise significant influence over Doane's operating and financial policies. During 2022, Doane earned $600,000 and paid cash dividends of $200,000 on April 1 and $150,000 on October 1. On July 1, 2022, Rich sold half of its stock in Doane for $660,000 cash.

Before income taxes, what amount should Rich include in its 2021 income statement as a result of the investment?

What should be the carrying amount of this investment in Rich's December 31, 2021 balance sheet?

What should the gain be on sale of this investment in Rich's 2022 income statement?