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How much be recorded as investment income for current year

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Reference no: EM132822194

Faye Co. owned 20% of Pen Inc.'s preference share capital and 50% of the ordinary share capital. Pen Inc.'s share capital outstanding comprised the following at year-end:

10% cumulative preference share capital - 2,000,000
Ordinary share capital - 7,000,000
Pen Inc. reported net income of $5,000,000 for the current year.

Problem a. How much should be recorded as investment income for the current year?

Problem b. What amount is the balance of Investment in Pen Inc. at the end of the current year?

Problem c. How much should be recorded as investment income for the current year assuming that the preference share capital of Pen Inc. are non-cumulative?

Reference no: EM132822194

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