Luigi Vittatoe
Dr. Donald Majors
EAC2212 Accounting 2
February 23, 2016
Week 7 Discussion
What dollar amount did Neosho receive upon the sale of the JMB stock? Explain why both stockholder Linton and President Cedeno are correct?
Neosho received $1,468,000 upon the sale of the JMB stock. With 30% ownership the investment and earnings of JMB Company are recorded using the equity method. With an original investment of $1,300,000 plus the earnings since acquisition, 1,240,000 + 520,000 = 1,760,000 * 30% = 528,000 minus the dividends received 440,000 +160,000 = 600,000 *30% =180,000. The net investment at time of the sale = 1,648,000. The proceeds from sale = 1,468,000 with the loss on sale of JMB Company = 180,000. Both the stockholder and the
Dr. Donald Majors
EAC2212 Accounting 2
February 23, 2016
Week 7 Discussion
What dollar amount did Neosho receive upon the sale of the JMB stock? Explain why both stockholder Linton and President Cedeno are correct?
Neosho received $1,468,000 upon the sale of the JMB stock. With 30% ownership the investment and earnings of JMB Company are recorded using the equity method. With an original investment of $1,300,000 plus the earnings since acquisition, 1,240,000 + 520,000 = 1,760,000 * 30% = 528,000 minus the dividends received 440,000 +160,000 = 600,000 *30% =180,000. The net investment at time of the sale = 1,648,000. The proceeds from sale = 1,468,000 with the loss on sale of JMB Company = 180,000. Both the stockholder and the