a. Calculate the equity income that Ace Corporation reports in 2017 related to its ownership in Spear

a. Calculate the equity income that Ace Corporation reports in 2017 related to its ownership in Spear

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February 17, 2022
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U.S. GAAP requires firms to account for equity investments in which ownership is between and using
the equity method. Ace Corporation owns of Spear Corporation during 2017 . Spear Corporation reported
net income of million for 2017 and declared and paid dividends of million during the year.
a. Calculate the equity income that Ace Corporation reports in 2017 related to its ownership in Spear
Corporation.

Answer and ExplanationSolution by a verified expert

Explanation
Calculate the equity income of Company A (Equity Income ) by multiplying the net income of Company S (Net Income ) which is
$100.4 million with the Company A's share in Company S (Share ) which is 35%.

Equity IncomeA = Net IncomeS × ShareAS
= $100.4 Million × 35%
= $35.14 Million

Verified Answer 숥
$35.14 Million

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