Steens Corp

question 108

Essay

Steens Corp. acquired a 30% interest in Proctor Co. on January 1, 2015, for $900,000. At that time, Proctor had 2 million of its no-par common shares issued and outstanding. During 2015, Proctor paid cash dividends of $340,000 and thereafter declared and issued a 5% common stock dividend when the market value was $2 per share. Proctor's net income for 2015 was $720,000. What should be the balance in Steen's investment account at the end of 2015?

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Definitions:

Total Income Yield

refers to the percentage of income an investment generates, considering both dividend or interest payments and capital gains.

Cash Payback Period

The duration required for an investment to generate cash flows sufficient to recover the initial investment cost.

Useful Life

The estimated duration a fixed asset is expected to be productive for its intended use, impacting depreciation calculations.

Net Cash Flows

The amount of cash that is generated or lost by a business during a given period, taking into account cash inflows and outflows from operating, investing, and financing activities.