Question
Cleaverland purchased 100% of Omaha on January 1, 2019 for $650,000. On that date, Omaha's stockholders' equity was $650,000, and the recognized book values of
Cleaverland purchased 100% of Omaha on January 1, 2019 for $650,000. On that date, Omaha's stockholders' equity was $650,000, and the recognized book values of Ottowas individual net assets approximated their fair values. Omaha had net incomes of $150,000 and $190,000 for 2019 and 2020, respectively. The subsidiary paid dividends amounting to $30,000 in both years. Cleaverland uses the cost method to account for its pre-consolidation investment in Omaha.
What was the balance in Equity Investment at December 31, 2020?
a. $650,000
b. $710,000
c. $990,000
d. $930,000
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