Grant, Inc. acquired 30% of South Co.'s voting stock for $200,000 on January 2, Year 2. Grant's 30% interest in South gave Grant the ability to exercise significant influence over South's operating and financial policies. During Year 2, South earned $80,000 and paid dividends of $50,000. South reported earnings of $100,000 for the six months ended June 30, Year 3, and $200,000 for the year ended December 31, Year 3. On July 1, Year 3, Grant sold half of its stock in South for $150,000 cash. South paid dividends of $60,000 on October 1, Year 3.

Before income taxes, what amount should Grant include in its Year 2 income statement as a result of the investment?

A) $15,000
B) $24,000
C) $50,000
D) $80,000

What's your answer & why???

Solution posted here tomorrow:

http://www.cpanet.com/cpa_forum/forum_posts.asp?TID=35586&am p;TPN=38