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Determine the gain or loss on sale of the interest

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Question - The balance of Pala Corporation's investment in Saga Company account at December 31, 2018, was $872,000, consisting of 80% of Saga's $1,000,000 stockholders' equity on that date and $72,000 goodwill. On May 1, 2019 Pala sold a 20% interest in Saga (one-fourth of its holdings) for $260,000. During 2019, Saga had net income of $300,000, and on July 1, 2019, Saga declared dividends of $160,000.

REQUIRED -

A. Determine the gain or loss on sale of the 20% interest?

B. Calculate Pala's income from Saga for 2017?

C. Determine the balance of Pala's investment in Saga account at December 31, 2017?

Reference no: EM132609093

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