15-11 Equity Method for Stock Investment
On January 4, Year 1, Ferguson Company purchased 72,000 shares
of Silva Company directly from one of the founders for a price of
$48 per share. Silva has 200,000 shares outstanding, including the
Daniels shares. On July 2, Year 1, Silva paid $194,000 in total
dividends to its shareholders. On December 31, Year 1, Silva
reported a net income of $647,000 for the year. Ferguson uses the
equity method in accounting for its investment...