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On January 1, 20X4, Pony Company acquired 25% of Stallion Companys common stock at underlying...

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Accounting

On January 1, 20X4, Pony Company acquired 25% of Stallion Companys common stock at underlying book value of $200,000. Stallion has 80,000 shares of $10 par value, 6 percent cumulative preferred stock outstanding. No dividends are in arrears. Stallion reported net income of $270,000 for 20X4 and paid total dividends of $140,000. Pony uses the equity method to account for this investment.

Based on the preceding information, what amount would Pony Company receive as dividends from Stallion for the year?

How is the answer $23,000?

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