Calculate income for a midyear investment
Car Corporation pays $600,000 for a 30 percent interest in Med Corporation on July 1, 2011, when the book value of
Med’s identifiable net assets equals fair value. Information relating to Med follows (in thousands):
|
December 31, 2010 |
December 31, 2011 |
|
|
Capital stock, $1 par |
$ 600 |
$ 600 |
|
Retained earnings |
400 |
500 |
|
Total stockholders’ equity |
$1,000 |
$1,100 |
|
Med’s net income earned evenly throughout 2011 |
$200 |
|
|
Med’s dividends for 2011 (paid $50,000 on |
||
|
March 1 and $50,000 on September 1) |
$100 |
REQUIRED: Calculate Car’s income from Med for 2011.