On January 2, 2020, Campbell, Inc. purchased a 20% interest in Renner Corp. for $2,000,000 cash. During 2020, Renner's net income was $2,500,000 and it paid dividends of $750,000. Campbell's 2020 income from Renner was:

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Business

Keyla Daniel

12 December, 12:54

On January 2, 2020, Campbell, Inc. purchased a 20% interest in Renner Corp. for $2,000,000 cash. During 2020, Renner's net income was $2,500,000 and it paid dividends of $750,000. Campbell's 2020 income from Renner was:

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Moshe Erickson · Answer 1

The answer is $500,000

Explanation:

The 20% interest in Renner Corp by Campbell Inc. represents a non-controlling interest.

Campbell Inc. must report the net income from Renner according to its percentage of share holding in the parent company (Renner Corp).

Renner's net income for the year was $2,500,000

Therefore, Campbell, Inc.'s 20% shareholding will be:

20% of $2,500,000

0.2 x $2,500,000

$500,000