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Breva 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 Johnstone’s equity method investment in Breva 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
$200000-$160000=$40000
$40000/40000shares=$1/- per share
10000shares of $1/-=$10000
$10000+$150000=$160000
Option C is the Correct answer.
Opening bal equity in Johnson at year start was 150,000. It holds a 25% shareholding in Breva which had a profit after dividends been paid of 40,000. 25% of 40,000 is 10,000. Now add 10,000 to existing equity of 150,000 gives you an ending balance figure of 160,000
Option C >>>>>>>>>>>>>>>>> $160,000 --
