Moss corp. owns 20% of dubro corp.'s preferred stock and 40% of its common stock. dubro's stock outstanding at december 31, year 1, is as follows: 10% cumulative preferred stock $100,000common stock 700,000dubro reported net income of $60,000 and paid dividends of $10,000 to its preferred shareholders for the year ended december 31, year 1. how much total revenue should moss record due to its investment in dubro?

Revenue due to investment in Dubro = $22,000

Explanation:

In the given case, revenue to be recorded will be based on calculation as follows:

Since investment in equity is 40% of total share, equity method will be used.

In such method all income share in equity and preference dividend will form part of income for the current year.

Dividend = $10,000 20% as invested in preference capital.

= $2,000

Share in income = $50,000 40% as invested in equity = $20,000

Note: Dividend will be deducted from net income as net income for equity

Net income - Dividend = $60,000 - $10,000 = $50,000

Thus, net share of income = $2,000 + $20,000 = $22,000

u = 30

continuing your method

= +

subtract from both sides

= - thus

= -

= ⇒ u = 30

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