Zwick Company bought 26,500 shares of the voting common stock of Handy Corporation in January 2018. In December, Handy announced $ 205,200 net income for 2018 and declared and paid a cash dividend of $ 6 per share on all 203,000 shares of its outstanding common stock. Zwick Company's dividend revenue from Handy Corporation in December 2018 would be:

Question

Business

Lydia Rosario

29 December, 01:28

Zwick Company bought 26,500 shares of the voting common stock of Handy Corporation in January 2018. In December, Handy announced $ 205,200 net income for 2018 and declared and paid a cash dividend of $ 6 per share on all 203,000 shares of its outstanding common stock. Zwick Company's dividend revenue from Handy Corporation in December 2018 would be:

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Mcintosh · Answer 1

The dividend revenue would be $159,000

Explanation:

Dividend is the term which is defined as the distributed to the common stock holders. And the dividend is distributed when the company makes the profit from the operations.

Computing the ownership share as:

Ownership share = Purchased shares / Net Income

where

Purchased shares is 26,500

Net Income is $205,200

So,

Ownership share = 26,500 / $205,200

Ownership share = 12.9% or 13%

So, neither the consideration or equity method is appropriate

Therefore,

= Shares * Price per share

= 26,500 * $6 per share

= $159,000