Question
On 1/1/2015, Choco paid $150,000 to acquire 15% of the voting common stock of Cookie. Following is the financial information about Cookie. Book value of
- On 1/1/2015, Choco paid $150,000 to acquire 15% of the voting common stock of Cookie. Following is the financial information about Cookie.
| Book value of assets | $450,000 |
| Book value of liabilities | $125,000 |
| Net income (2015) | $80,000 |
| Dividends (2015) | $40,000 |
| Fair market value of investment 1/1/2015 Fair market value of investment 12/31/2015 | $160,000 $180,000 |
Cookie has a patent with book value of $5,000 but actually $25,000 with 8 years remaining life.
Q1: What method should be used to record this investment?
Q2: What is the balance of the investment account in Cookie at 12/31/2015?
Q3: What is the journal entry to record for dividends paid by Cookie?
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The Audit Process Principles Practice And Cases
Authors: Iain Gray, Stuart Manson
5th Edition
1408030497, 9781408030493
