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CFA Level 2
Financial Reporting and Analysis

Equity Method Income Recognition

Hard Intercorporate Investments Equity Method

Company A acquired a 30% equity stake in Company B, which qualifies for the equity method of accounting. At the end of the fiscal year, Company B reported net income of $1,000,000 and paid dividends of $200,000. Assuming no amortization of excess purchase price and no impairment, how much should Company A recognize in its income statement as its share of Company B's net income?

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