On January 2, 2018, Howdy Doody Corporation purchased 13% of Ranger Corporation's common stock for $52,000. Ranger's net income for the years ended December 31, 2018 and 2019, were $13,000 and $56,000, respectively. During 2018, Ranger declared and paid a dividend of $67,000. On December 31, 2018, the fair value of the Ranger stock owned by Howdy Doody had increased to $66,000. How much should Howdy Doody show in the 2018 income statement as income from this investment

$22710

Explanation:

First and foremost, we have to calculate the dividend that was received by Howdy Doody corporation which will be:

= $67000 × 13%

= $67000 × 0.13

= $8710

Then, we calculate the increase in the fair value of the stock that was credited to the income statement which will be:

= $66000 - $52000

= $14000

We then add both the dividend received and the increase in fair value which will be:

= $8710 + $14000

= $22710

rational decision making is a multi-step process for making choices between alternatives. the process of rational decision making favors logic, objectivity, and analysis over subjectivity and insight. the word “rational” in this context does not mean sane or clear-headed as it does in the colloquial sense.

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