Company A purchased a certain number of Company Bs outstanding voting shares at $20 per share as a long-term investment. Company B had outstanding 24,000 shares of $12 par value stock. Fair Value Method Equity Method

For b, e, f, and g, assume the following: Number of shares acquired of Company B stock 3,000 8,400 Net income reported by Company B in first year $ 61,000 $ 61,000 Dividends declared by Company B in first year $ 14,000 $ 14,000 Market price at end of first year, Company B stock $ 17 $ 17 Answer the following requirements relating to the measurement and reporting by Company A after acquisition of the shares of Company B stock: a. What level of ownership by Company A of Company B is required to apply the method?

b.

At acquisition, the investment account on the books of Company A should be debited at what amount?

FAIR VALUE METHOD = ?

EQUITY METHOD = ?

e.	What is the balance in the investment account on the balance sheet of Company A at the end of the first year? FAIR VALUE METHOD = ? EQUITY METHOD = ?

f.	What amount of revenue from the investment in Company B should Company A report at the end of the first year? FAIR VALUE METHOD = ? EQUITY METHOD = ?

g.	What amount of unrealized loss should Company A report at the end of the first year?
	FAIR VALUE METHOD = ? EQUITY METHOD = ?