Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Franklin Corporation owns 15% of the voting stock of Grantham Company and has been reporting it as an equity investment with no significant influence. At

Franklin Corporation owns 15% of the voting stock of Grantham Company and has been reporting it as an equity investment with no significant influence. At the beginning of the current year, the investment has a fair value of $50,000,000. Franklin originally purchased its 15% interest for $35,000,000. Franklin purchases an additional 10% interest in Granthams voting stock for $40,000,000 and determines that the equity method is now appropriate. Any basis difference is attributed to goodwill. Grantham reports net income of $3,000,000 for the current year, and declares and pays $500,000 in dividends. The year-end fair value of Franklins 25% interest is $100,000,000.

Required: At what amount does Franklin report the investment on its year-end balance sheet?

Question 7 options:

a)

50 million

b)

100 million

c)

90 million

d)

90.625 million

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

Microeconomics

Authors: Michael Parkin

6th Edition

0321112075, 9780321112071

More Books

Students also viewed these Accounting questions

Question

What are the two general revenue recognition criteria?

Answered: 1 week ago