Ask Question
27 January, 03:33

Ramiro Company purchased 40% of the outstanding stock of Marco Company on January 1. Marco reported net income of $90,500 and declared dividends of $21,500 during the year. How much would Ramiro adjust its investment in Marco Company under the equity method

+5
Answers (1)
  1. 27 January, 03:38
    0
    Given the following:

    Purchased outstanding stock by Ramiro = 40%

    Marco net income = $90,500

    Marco dividend = $21,500

    From the information above, under the Equity method, Purchasing a percentage share of a stock entitles the buyer to partial ownership of the company. With Ramiro's 40% purchase of Marco's outstanding stock, Ramiro is entitled to 40% of Marco's net income and dividend.

    Therefore;

    40% of net income:

    0.4 * $90,500 = $36,200 (Ramiro's share of net income)

    40% of dividend:

    0.4 * $21,500 = $8600 (Ramiro's share of dividend)

    Ramiro's adjustment = $ (36,200 - 8600) = $27,600
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “Ramiro Company purchased 40% of the outstanding stock of Marco Company on January 1. Marco reported net income of $90,500 and declared ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers