Kross company purchase an equity investment in penno, Accounting Basics

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Kross company purchase an equity investment in penno

Problem

Kross Company purchases an equity investment in Penno Company at a purchase price of $2.5 million, representing 40% of the book value of Penno. During the current year, Penno reports net income of $300,000 and pays cash dividends of $100,000. At the end of the year, the fair value of Kross's investment is $2.65 million. What amount of income does Kross report relating to this investment in Penno for the year? Explain.

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Accounting Basics: Kross company purchase an equity investment in penno

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Accounting Basics: Kross company purchase an equity investment in penno

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