CPA-00320On January 2, Year 3, Well Co. purchased 10% of Rea, Inc.'s outstanding common shares for USD 400,000. Well is the largest single shareholder in Rea, and Well's officers are a majority on Rea's board of directors. Rea reported net income of USD 500,000 for Year 3 and paid dividends of USD 150,000. In its December 31, Year 3, balance sheet, what amount should Well report as investment in Rea?
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8 .CPA-00421On September 1, Year 1, Phillips, Inc. issued common stock in exchange for 20% of Sago, Inc.'s outstanding common stock. On July 1, Year 3, Phillips issued common stock for an additional 75% of Sago's outstanding common stock. Sago continues in existence as Phillips' subsidiary. How much of Sago's Year 3 net income should be reported as accruing to Phillips?
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