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Winston Corporation purchased 40 percent of the stock of Fullbright

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Winston Corporation purchased 40 percent of the stock of Fullbright Company on January 1, 20X2, at underlying book value. The companies reported the following operating results and divided payments during the first three years of intercorporate ownership: Winston Corp: 20X2 operating income - $100,000, 20X3 operating income - $60,000, 20X4 Operating income - $250,000, 20X2 Dividends - $40,000, 20X3 dividends - $80,000, 20X4 Dividends - $120,000. Fullbright Company: 20X2 net income - $70,000, 20X3 Net Income - $40,000, 20X4 Net Income - $25,000, 20X2 Dividends - $30,000, 20X3 dividends - $60,000, 20X4 dividends - $50,000. Compute the net income reported by Winston for each of the three years, assuming it accounts for its investments in Fullbright using (a) the cost method and (b) the equity method.
Submitted: 8 years ago.
Category: Homework
Expert:  Neo replied 8 years ago.

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