On January 1, 20X9, Timber Company acquired 25% of Johnson Company's common stock at underlying book...
On January 1, 20X9, Timber Company acquired 25% of Johnson Company's common stock at underlying book value of $200,000. Johnson reported net income of $270,000 for 20X9 and paid total dividends of $140,000. Timber uses the equity method to account for this investment.
What amount would Timber Company receive as dividends from Johnson for the year?
A. $23,000
B. $35,000
C. $37,000
D. $92,000
*Please show your computations for the answer.
Homework Answers
Cash dividend received from Johnson = Total Dividend*Rate
= 140000*25%
Cash dividend received from Johnson = 35000
So answer is b) $35000
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