Question
Foxx Corporation acquired all of Greenburg Companys outstanding stock on January 1, 2016, for $662,000 cash. Greenburgs accounting records showed net assets on that date
Foxx Corporation acquired all of Greenburg Companys outstanding stock on January 1, 2016, for $662,000 cash. Greenburgs accounting records showed net assets on that date of $490,000, although equipment with a 10-year life was undervalued on the records by $99,500. Any recognized goodwill is considered to have an indefinite life.
Greenburg reports net income in 2016 of $106,000 and $133,000 in 2017. The subsidiary declared dividends of $20,000 in each of these two years.
Account balances for the year ending December 31, 2018, follow. Credit balances are indicated by parentheses.
Foxx | Greenburg | ||||||
Revenues | $ | (912,000 | ) | $ | (764,000 | ) | |
Cost of goods sold | 114,000 | 191,000 | |||||
Depreciation expense | 370,000 | 406,000 | |||||
Investment income | (20,000 | ) | 0 | ||||
Net income | $ | (448,000 | ) | $ | (167,000 | ) | |
Retained earnings, 1/1/18 | $ | (1,204,000 | ) | $ | (362,000 | ) | |
Net income | (448,000 | ) | (167,000 | ) | |||
Dividends declared | 120,000 | 20,000 | |||||
Retained earnings, 12/31/18 | $ | (1,532,000 | ) | $ | (509,000 | ) | |
Current assets | $ | 342,000 | $ | 103,000 | |||
Investment in subsidiary | 662,000 | 0 | |||||
Equipment (net) | 1,094,000 | 640,000 | |||||
Buildings (net) | 922,000 | 412,000 | |||||
Land | 708,000 | 147,000 | |||||
Total assets | $ | 3,728,000 | $ | 1,302,000 | |||
Liabilities | $ | (1,296,000 | ) | $ | (493,000 | ) | |
Common stock | (900,000 | ) | (300,000 | ) | |||
Retained earnings | (1,532,000 | ) | (509,000 | ) | |||
Total liabilities and equity | $ | (3,728,000 | ) | $ | (1,302,000) |
Determine parent's investment income for 2018 under partial equity method and equity method. (This was the only part of the question, i couldnt get the correct answer for, please help)
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