Question

Jack Corporation purchased a 22% interest in Jill Corporation for $1,640,000 on January 1, 2018. Jack can significantly influence Jill. On December 10, 2018, Jill declared and paid $1.7 million in dividends. Jill reported a net loss of $4.2 million for the year. What amount of loss should Jack report in its income statement for 2018 relative to its investment in Jill

Answer 1

the loss reported in its income statement is $924,000

Step-by-step explanation:

The computation of the loss reported in its income statement is as follows;

= Loss reported by Jill × percentage of purchased interest of jack in Jill

= $4,200,000 × 22%

= $924,000

Hence, the loss reported in its income statement is $924,000

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