On January 1, 2025, Beyonce Co. purchased 25,000 shares (a 10% interest) in Elton John Corp. for
Question:
On January 1, 2025, Beyonce Co. purchased 25,000 shares (a 10% interest) in Elton John Corp. for $1,400,000. At the time, the book value and the fair value of John’s net assets were $13,000,000.
On July 1, 2026, Beyonce paid $3,040,000 for 50,000 additional shares of John common stock, which represented a 20% investment in John. As a result of this transaction, Beyonce owns 30% of John and can exercise significant influence over John’s operating and financial policies. John reported the following net income and declared and paid the following dividends.
InstructionsDetermine the ending balance that Beyonce Co. should report as its investment in John Corp. at the end of 2026.
Step by Step Answer:
Intermediate Accounting
ISBN: 9781119790976
18th Edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield