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Ziegler Company owns 40% of Norm Company's outstanding voting stock. During the current year, Norm reported income of $2 million and declared dividends of $1 million. Ziegler should report income from its investment of:______.

Answer :

sadddamkashmiri801

Answer:

$800,000

Explanation:

The reason is that the investment in Norm plc is an investment in associate and must be accounted for as an associate inaccordance with equity method. And equity method says that the income from such investments are the percentage share of equity shareholdings. So the share of Income reported as income from investment would be:

Income from investment = Net Income * percentage share = $2m * 40% = $0.8million

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