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XYZ Company owns 10,000 shares of Mina Corporation’s stock.

Mina currently has40,000 shares outstanding. During the year, Mina had net income of $200,000 and paid $160,000 in dividends. At the beginning of the year, there was a balance of $150,000 in XYZ’s equity method investment in Mina Corporation account. At the end of the year, the balance in this account should be

A. $110,000

B. $150,000

C. $160,000

D. $240,000

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Question added by Deleted user
Date Posted: 2015/02/24
Ahmer Zamir
by Ahmer Zamir , Consultant , Saleem Associates & Co

The correct option is C)160,000

The XYZ " s investment is on equity method basis so that it total investment will increase by profit of $ (200,000*0.25=50,000) total value of investment after announcement of net income $(150,000+50,000=200,000) and upon payment of dividend the investment  will be reduce by share of dividend $(160,000*0.25=40,000) . The total value of investment will be at end of the year will be $(200,000-40,000=160,000).. The net affect on the investment is $10,000 increment in total value at the end of the year.

Vivek Patil
by Vivek Patil , Dy. Manager , Precision Seals Manufacturing Ltd

$200000-$160000=$40000

$40000/40000 shares=Share of $1/-

10000shares @$1=$10000

Opening Bal$150000+$10000=$160000 is answer

Adham Tohame
by Adham Tohame , General Restaurant Manager , Bateel

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Mohammed Asim Nehal
by Mohammed Asim Nehal , M Asim Nehal & Co , Chartered Accountants

c) Is the correct answer .................

Khaled Mohee Eldeen Abbas Mahmoud
by Khaled Mohee Eldeen Abbas Mahmoud , Chartered Accountant # 10465 , Self-employed

the answer is C

$200.000 - $160.000 = $40.000

$40.000/40.000 shares = $1

$1 *10000 shares = $10.000

beginning balance +  $10.000 = $160.000

Deleted user
by Deleted user

Thanks for the invite

I wait for an answer Experts interest

 

Greetings

Anoop Mohan
by Anoop Mohan , Finance Manager , Arafa plywoods

190000........... At the year end

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