On January 1 2011 Monroe Inc purchased 10 000 shares of

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On January 1, 2011, Monroe, Inc., purchased 10,000 shares of Brown Company for $250,000,
giving Monroe 10 percent ownership of Brown. On January 1, 2012, Monroe purchased an
additional 20,000 shares (20 percent) for $590,000. This latest purchase gave Monroe the
ability to apply significant influence over Brown. The original 10 percent investment was
categorized as an available-for-sale security. Any excess of cost over book value acquired for
either investment was attributed solely to goodwill.Brown reports net income and dividends as
follows. These amounts are assumed to have occurred evenly throughout these
years.__________________ Net Income Cash Dividends (paid
quarterly)2011...........................$350,000...............$100,0002012...........................
480,000..................110,0002013........................... 500,000..................120,000On July 1, 2013,
Monroe sells 2,000 shares of this investment for $46 per share, thus reducing its interest from
30 to 28 percent. However, the company retains the ability to significantly influence Brown.
Using the equity method, what amounts appear in Monroe's 2013 income statement?View
Solution:
On January 1 2011 Monroe Inc purchased 10 000 shares of

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