Osaka Co. acquired a 10% interest in Chen Corp. on December 31, 2013 for HK$3,780,000.

Osaka Co. acquired a 10% interest in Chen Corp. on December 31, 2013 for HK$3,780,000. During 2014, Chen had net income of HK$2,400,000 and paid cash dividends of HK$600,000. Osaka’s 2014 income statement will report

a. dividend income of HK$60,000.
b. investment income of HK$180,000.
c. investment income of HK$240,000.
d. cannot be determined from the information given.

Step-by-Step explanation

Osaka’s share of Chen’s net income for 2014 is 10% × HK$2,400,000 = HK$240,000.

Osaka’s share of Chen’s cash dividends for 2014 is 10% × HK$600,000 = HK$60,000.

Osaka’s investment income for 2014 is therefore HK$240,000 – HK$60,000 = HK$180,000.

Nance Company owns 40% interest in the shares of Finley Corporation.

Nance Company owns 40% interest in the shares of Finley Corporation. During the year,Finley pays $25,000 in dividends, and reports $100,000 in net income. Nance Company’sinvestment in Finley will increase by

a.$25,000.
b.$40,000.
c.$32,000.
d.$30,000.

ANSWER: The investor reports his or her portion of the investee’s net income using the equity method, in this case 40% of $100,000 = $40,000.

If you get this, you are a critical thinker. I enter the garden. There are 34 people. You kill 30.

Riddle: If you get this, you are a critical thinker. I enter the garden. There are 34 people. You kill 30. How many people are in the garden?

If you are following our site, we have solved many similar riddles. First, let’s say that the answer may come to your mind as 4, but it is not the correct answer. Then let’s explain that the answer is not 4.

 

If you enter a garden and kill 30 people, the rest will run away. There are no living people. It is necessary to think of the riddle in this way. Therefore the answer is not 4 people.

4 people escaped from the garden. If 30 people died, you are only yourself in the garden now. For this reason, the correct answer to our riddle is not 4.

Answer: 1 person.