Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

ANSWER ALL QUESTIONS RELATED TO THE PROBLEM! ANSWER ALL QUESTIONS RELATED TO THE PROBLEM! ANSWER ALL QUESTIONS RELATED TO THE PROBLEM! ANSWER ALL QUESTIONS RELATED

ANSWER ALL QUESTIONS RELATED TO THE PROBLEM! ANSWER ALL QUESTIONS RELATED TO THE PROBLEM! ANSWER ALL QUESTIONS RELATED TO THE PROBLEM!

ANSWER ALL QUESTIONS RELATED TO THE PROBLEM! ANSWER ALL QUESTIONS RELATED TO THE PROBLEM! ANSWER ALL QUESTIONS RELATED TO THE PROBLEM!

image text in transcribedimage text in transcribed

On January 1, 2013, an investor purchases 21,000 common shares of an investee at $12 (cash) per share. The shares represent 20% ownership in the investee. The investee's common stock does not have a readily determinable fair value. On January 1, 2013, the book value of the investee's assets and liabilities equals $900,000 and $200,000, respectively. On that date, the appraised fair values of the investee's identifiable net assets approximated the recorded book values, except for a customer list. On January 1, 2013, the customer list had a recorded book value of $0, an estimated fair value equal to $50,000 and a 5 year remaining useful life. During the year ended December 31, 2013, the investee company reported net income equal to $42,000 and dividends equal to $20,000. Noncontrolling investment accounting (price different from book value) Assume the investor does not exert significant influence over the investee. Determine the balance in the "Investment in Investee" account at December 31, 2013. O$210,000 O$252,000 O$216,600 O$255,600 On January 1, 2013, an investor purchases 14,000 common shares of an investee at $12 (cash) per share. The shares represent 20% ownership in the investee. The investee shares are not considered "marketable because they do not trade on an active exchange. On January 1, 2013, the book value of the investee's assets and liabilities equals $900,000 and $200,000, respectively. On that date, the appraised fair values of the investee's identifiable net assets approximated the recorded book values, except for a customer list. On January 1, 2013, the customer list had a recorded book value of $0, an estimated fair value equal to $50,000 and a 5 year remaining useful life. During the year ended December 31, 2013, the investee company reported net income equal to $42,000 and dividends equal to $20,000. Noncontrolling investment accounting (price different from book value) Assume the investor can exert significant influence over the investee. Determine the balance in the "Investment in Investee" account at December 31, 2013. O$190,000 O$172,400 O$170,400 O$168,000

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Managerial Accounting

Authors: Unknown Author

1st Edition

007723023X, 978-0077230234

More Books

Students also viewed these Accounting questions

Question

understand the meaning of the terms discipline and grievance

Answered: 1 week ago