Respuesta :
This income does not include the cash dividend of $62,000 that Ranger Corporation paid in 2024.
What is income?
Income is the money or wages earned by an individual or business entity through work, investments or other sources of revenue. It is a key component of an individual's or business's financial success and is typically the main factor used to determine tax liability. Income is typically tracked over a period of time, usually a year, and reported on a person's or entity's income tax return. Some types of income include wages, salaries, tips, bonuses, rental income, investment income, alimony payments, capital gains, royalties, and pensions.
The amount of income Howdy Doody should show in the 2024 income statement from the Ranger Corporation stock investment is $20,000. This amount is calculated by taking the difference between the fair value of the Ranger stock on December 31, 2024 ($74,000) and the cost of the stock on January 2, 2023 ($51,000), and then multiplying this difference by the 13% ownership stake Howdy Doody has in Ranger Corporation. Mathematically, this is expressed as (74,000 - 51,000) x 0.13 = 20,000.
This income does not include the cash dividend of $62,000 that Ranger Corporation paid in 2024, as that dividend is recorded as a separate line item on Howdy Doody's income statement.
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