So let’s
start with the purchase 50,000 of stock from Blackhawk for $500, XXXXXXXXXXThe
stock you...

Question

So let’s
start with the purchase 50,000 of stock from Blackhawk for $500, XXXXXXXXXXThe
stock you purchased represents 40% interest in Blackhawk. In 2010 income
statement reported all income from investments of $126,000.00.In 2011 you sold
your stock in Blackhawk for $575, XXXXXXXXXXBlackhawk didn’t pay any dividends during
2010 but reported an income of $202, XXXXXXXXXXI have to explain to the customer why he has a -$ XXXXXXXXXXon the books for his investment and not a $ XXXXXXXXXXgain. Please tell me why he has a loss of $6000.00

Robert · Accepted Answer

Answer
                     Share in income =$202,500*40% 
                                                =$81,000 
                     Stock purchased for =$570,000 
                     Sold at                      =$575,000 
                           Loss = $81,000-$75,

So let’s start with the purchase 50,000 of stock from Blackhawk for $500, XXXXXXXXXXThe stock you purchased represents 40% interest in Blackhawk. In 2010 income statement reported all income from...

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