Question
Analyzing and Interpreting Equity Method Investments Stober Company purchases and investment in Lang Company at a purchase price of $1 million cash, presenting 30% of
Analyzing and Interpreting Equity Method Investments Stober Company purchases and investment in Lang Company at a purchase price of $1 million cash, presenting 30% of the book value of Lang. During the year, Lang reports net income of $100,000 and pays cash dividends of $40,000. At the end of the year, the fair value of Stobers investment is $1.2 million.
a) At what amount is the investment reported on Stober's balance sheet at year-end?
b) What amount of income from investments does Stober report? Explain.
c) Prepare journal entries to record the transactions and events above.
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