Ziegler corporation purchased 25,000 shares of common stock of the sherman corporation for $40 per share on january 2, 2014. sherman corporation had 100,000 shares of common stock outstanding during 2015, paid cash dividends of $90,000 during 2015, and reported net income of $300,000 for 2015. ziegler corporation should report revenue from investment for 2015 in the amount of:

Ziegler Corporation should report revenue from investment for 2015 in the amount of $75,000

Explanation:

given data

purchased = 25,000 shares

common stock = $40 per share

common stock outstanding = 100,000 shares

paid cash dividends = $90,000

net income = $300,000

to find out

revenue from investment for 2015 in the amount of

solution

we first get here Investment in Sherman Corporation that is

Investment  = purchased ÷ common stock outstanding     ..........................1

put here value

Investment  =

Investment = 25%  

so that income from investment will be here we get

income from investment = 25%   of net income ........................2

put here value

income from investment = 25%  × $300,000

income from investment = 0.25  × $300,000

income from investment = $75,000

so Ziegler Corporation should report revenue from investment for 2015 in the amount of $75,000