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On 1/1/20, Grape Company purchased 25% of Juice Company outstanding stock for $1,000,000. At the date of purchase, Juice Company's total common stockholders' equity was
On 1/1/20, Grape Company purchased 25% of Juice Company outstanding stock for $1,000,000. At the date of purchase, Juice Company's total common stockholders' equity was $4,000,000. Assume no fair value/book value difference for Juice Company stockholders' equity exists at 1/1/20. Juice Company paid $300,000 in dividends during 2020 and reported net income of $525,000. Juice's common stock is selling for $5,000,000 at the end of 2020. For all parts below, use $XXX,XXX format for your answer. a. If Grape's intent for the purchase is to invest excess cash for a shorter period of time and Grape can only have board of director representation on Juice's Board if existing Board members agree, 1. What would be included as the total dollar amount of Investment In Juice on Grape's balance sheet at 12/31/20? $1,306,250 2. What would be the dollar amount included in Grape's stockholders' equity related to Grape's Investment In Juice on 12/31/20? b. If Grape's intent for the purchase is to be able to influence Juice financing and operating decisions since it can now have a seat on Juice's Board of Directors without other Board members' permission, 1. What would be included as the total dollar amount of Grape's Investment In Juice asset on Grape's balance sheet 12/31/20? $1,056,250 2. What dollar amount would be included in Grape's stockholders' equity related to this Investment in Juice on 12/31/20
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