Question
Company A purchased 20% of Company B's common shares on 1/1/20 For $750,000. Company B reported $450,000 of net income for 2020 and declared a
Company A purchased 20% of Company B's common shares on 1/1/20 For $750,000. Company B reported $450,000 of net income for 2020 and declared a $250.000 dividend during 2020. The fair value of the Company's 20% investment in Company B was $820,000 at the end of 2020. What amounts should Company A report as its "investment income" in the income statement and its "investment in Company B" in the balance sheet, respectively, if Company A does not have significant influence on Company B's operation? a. $120,000 and $820,000 b. $50,000 and $820,000 c. $90,000 and $840,000 d. $90,000 and $790,000 e. (none of these)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started