Mehan incorporated- How much income did Mehan report from Cook during 2010( with explanation)
On January 1, 2010, Mehan, incorporated purchased 15,00 shares of Cook Company f or $ 150,000 giving Mehan a 15% ownership of Cook. On January 1, 2011 Mehan purchased an additional 25,000 shares (25%) of Cook for $300,000. This last purchase gave Mehan the ability to apply significant influence over Cook. The book value of Cook on January 1, 2010 was $1,000,000. The book value of Cook on January 1, 2011, was $ 1, 1150,000. Any excess of cost over book value for this second transaction is assigned to a database and amortized over five years. Cook reports net income and dividend as follows. These amounts are assumed to have occurred evenly throughout the years.
Net income Dividends
2010 $200,000 $50,000
2011 225,000 50,000
2012 250,000 60,000
On April 1, 2012, just after its first dividend receipt, Mehan sells 10,000 shares of its investment.
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