Company R pays $170,000 for a 30% interest in Company E on January 1, 2015. Company Es
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Company R pays $170,000 for a 30% interest in Company E on January 1, 2015. Company E’s total stockholders’ equity on that date is $500,000. The excess price is attributed to equipment with a 5-year life. During 2015, Company E reports net income of $35,000 and pays total dividends of $10,000. Answer the following questions assuming the investment is recorded under the equity method:
a. What is Company R’s investment income for 2015?
b. What is Company R’s investment balance on December 31, 2015?
c. Explain, in words, the investment balance on December 31, 2015.
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a Company Rs Investment Income for 2015 Description Amount Initial Investment Cost 170000 Company Es ...View the full answer
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Related Book For 
Advanced Accounting
ISBN: 978-1305084858
12th edition
Authors: Paul M. Fischer, William J. Tayler, Rita H. Cheng
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