Question - On January 1, 2010, Mehan, Incorporated purchased 15000 shares of Cook Company for $150000 giving Mehan a 15% ownership of Cook. On January 1, 2011 Mehan purchased an additional 25000 shares (25%) of Cook for $300000. This last purchase gave Mehan the ability to apply significant influence over Cook. The book value of Cook on January 1, 2010, was $1000000. The book value of Cook on January 1, 2011, was $1150000. Any excess of cost over book value for this second transaction is assigned to a database and amortized over five years.
net income 2010=200000 div=50000
net income 2011=225000 div=50000
net income 2012=250000 div=60000
On April 1, 2012, just after its first dividend receipt, Mehan sells 10000 shares of its investment.
How much of Cook's net income did Mehan report for the year 2012?
A. $61750
B. $81250
C. $72500