Arb Corporation acquired 25 percent of Tee Corporation's outstanding common stock on October 1, for $600,000. A summary of Tee's adjusted trial balances on this date and at December 31 follows (in thousands):

Arb uses the equity method of accounting. No information is available concerning the fair values of Tee's assets and liabilities.REQUIRED1. Determine Arb's investment income from Tee Corporation for the year ended December 31.2. Compute the correct balance of Arb's investment in Tee account at December31.

Transcribed Image Text:

December 31 October 1 Debits Current assets $ 500 $ 250 Plant assets-net 1,500 800 1,550 600 Expenses (including cost of goods sold) Dividends (paid in July) 200 $3.000 200 $2,600 Credits $ 300 $ 200 Current liabilities Capital stock (no change during the year) Retained earnings January 1 1,000 500 1,000 500 Sales 1,200 900 $3.000 $2,600