Grant, Inc. acquired 30% of South Company\'s common stock for $350,000 on Januar
ID: 2505233 • Letter: G
Question
Grant, Inc. acquired 30% of South Company's common stock for $350,000 on January 1, 2011. During 2011, South Company reported a net income of $120,000 and paid dividends totaling $30,000. For 2012, South Company paid 60% of its net income to stockholders as dividends. On December 31, 2012, Grant, Inc. sold one-half of its investment in South Company for $250,000 cash. Grant, Inc. reported a gain from selling one-half of its investment in South Company on its 2012 income statement (note the amount of the gain has been intentionally omitted from the given information).
Assume the total increase to Grant, Inc.'s 2012 net income resulting from its investment in South Company's stock was $103,500. Calculate the net income reported by South Company in 2012. Do not use decimals in your answer.
Explanation / Answer
2. The net income reported by South company= 120000+103500/2= $171750
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