Question

In what way can it be beneficial to a country for its firms to engage in FDI? Explain your answer with an example

Zach purchased 75% of David on January 1, 2013 paying $500,000. The remaining 25% of David shares continued to trade at a total of $215,000. David reported common stock of $280,000 on that date with retained earnings of $200,000. A patent was undervalued in the financial records by $30,000 with a 5 year remaining life. Any excess over the patent amount was allocated to goodwill. Goodwill was allocated proportionately to the parent and the subsidiary. David earns net income and declares dividends as follows: income for 2013, 2014, and 2015 was $75,000, 596,000, and 110,000 respectively. Dividends for 2013, 2014, and 2015 were $39,000, $44,000, and $60,000 respectively.

prepare a schedule reflecting the allocation of goodwill to parent amd the subsidiary

Answer 1

Dividend distribution in the books of David
Particulars	2013	2014	2015
Income	$ 75,000.00	$ 96,000.00	$ 110,000.00
Dividends	$ 39,000.00	$ 44,000.00	$    60,000.00
Zach - 75%	$ 29,250.00	$ 33,000.00	$    45,000.00
David - 25%	$    9,750.00	$ 11,000.00	$    15,000.00