during 2005 south earned 80 000 and paid dividends of 50 000 south reported earnings 605470

Grant, Inc. acquired 30% of South Co.’s voting stock for $200,000 on January 2, 2005. Grant’s 30% interest in South gave Grant the ability to exercise significant influence over South’s operating and financial policies. During 2005, South earned $80,000 and paid dividends of $50,000. South reported earnings of $100,000 for the six months ended June 30, 2006, and $200,000 for the year ended December 31, 2006. On July 1, 2006, Grant sold half of its stock in South for $150,000 cash. South paid dividends of $60,000 on October 1, 2006.

Before income taxes, what amount should Grant include in its 2005 income statement as a result of the investment?

$15,000
$24,000
$50,000
$80,000
In Grant’s December 31, 2005 balance sheet, what should be the carrying amount of this investment?

$200,000
$209,000
$224,000
$230,000
In its 2006 income statement, what amount should Grant report as gain from the sale of half of its investment?

$24,500
$30,500
$35,000
$45,500

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