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17 September, 19:12

Fox Co. purchased 10,000 shares (2% ownership) of Owl Corp. on February 14. Fox received a stock dividend of 2,000 Owl shares on the following April 30, when the market value per share was $35. Owl paid a cash dividend of $2 per share on December 15, the same year. In its income statement for this year, what amount should Fox report as dividend income?

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  1. 17 September, 19:28
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    Fox Co. shall report dividend income of $24,000 in its income statement prepared for the year.

    Explanation:

    Total number of held by the Fox Co. of Owl Corp during the year:

    Number of shares purchased on February 14: 10,000

    Number of shares received as stock dividend on April 30: 2,000

    Total shares held by the Fox Co. 12,000

    Dividend paid by the Owl Corp during the year=$2 per share

    Total dividend to be received by Fox Co. (2*12000) = $24,000

    Fox Co. shall report dividend income of $24,000 in its income statement prepared for the year.
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