In 20X0, Neil Company held the following investments in common stock:

•25,000 shares of B&K Inc.'s 100,000 outstanding shares. Neil's level of ownership gives it the ability to exercise significant influence over the financial and operating policies of B&K.

•6,000 shares of Amal Corporation's 309,000 outstanding shares.

During 20X0, Neil received the following distributions from its common stock investments:

November 6: $30,000 cash dividend from B&K November 11: $1,500 cash dividend from Amal

December 26: 3 percent common stock dividend from Amal; The closing price of this stock was $115 per share.

What amount of dividend revenue should Neil report for 20X0?

Question

Business

Rodrigo Clarke

24 December, 13:10

In 20X0, Neil Company held the following investments in common stock:

•25,000 shares of B&K Inc.'s 100,000 outstanding shares. Neil's level of ownership gives it the ability to exercise significant influence over the financial and operating policies of B&K.

•6,000 shares of Amal Corporation's 309,000 outstanding shares.

During 20X0, Neil received the following distributions from its common stock investments:

November 6: $30,000 cash dividend from B&K November 11: $1,500 cash dividend from Amal

December 26: 3 percent common stock dividend from Amal; The closing price of this stock was $115 per share.

What amount of dividend revenue should Neil report for 20X0?

+5

Answers (1)

Know the Answer?

Trevin Hardy · Answer 1

total dividends revenue for 20X0: $22,200

Explanation:

25,000 B&K

6,000 Amal

B&K dividends are not revenue as there is a significant influence it is deciding to distribute the dividends therefore, not creating a gain rather moving cash form one place to another.

Amal dividends are revenue, as it has no impact in the business decisions.

Amal dividends:

cash dividends: 1,500

stock dividends:

3% stock x 6,000 = 180 shares

180 shares x 115 each = 20,700

total: 1,500 + 20,700 = 22,200