On January 1, 2018, William Company acquired 30% of eGates Company’s common stock, at underlying book value of $100,000. eGate has 100,000 shares of $2 par value, 5% cumulative preferred stock outstanding. No dividends are in arrears. eGate reported net income of $150,000 for 20X8 and paid total dividents of $72,000. William uses the equity method to account for this investment. Based on the preceding information, (1) What amount would William Company receive as dividends from eGate for the year and (2) What amount of investment income will William Company report from its investment in eGate for the year? I am calculating 21,600 and 45,000 respectively. However, the course hero document I downloaded says the answers are 18,600 and 42,000 respectively. Which is correct? and if the course hero document is correct, how did they calculate it? Thank you.
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