Sale of investment on income statement

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Rich, Inc. acquired 30% of Doane Corp.'s voting stock on January 1, 2010 for $400,000. During 2010, Doane earned $160,000 and paid dividends of $100,000. Rich's 30% interest in Doane gives Rich the ability to exercise significant influence over Doane's operating and financial policies. During 2011, Doane earned $200,000 and paid dividends of $60,000 on April 1 and $60,000 on October 1. On July 1, 2011, Rich sold half of its stock in Doane for $264,000 cash.

What should be the gain on sale of this investment in Rich's 2011 income statement?

a) $64,000.

b) $55,000.

c) $49,000.

d) $40,000.

Reference no: EM13153356

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