Question
On February 4, 2016, Investor purchased 15% of Investee common stock for $62,000. Investees net income for the years ended December 31 2016 and 2017
On February 4, 2016, Investor purchased 15% of Investee common stock for $62,000. Investees net income for the years ended December 31 2016 and 2017 were $18,000 and $56,000 respectively. Investee declared no dividends during 2016; however, during 2017, the company declared a $70,000 dividend. On December 31, 2016, the fair value of investees stock that investor owned had increased to $72,000; in 2017, it increased again to $75,000. What is the carrying value of the investment on investors December 31, 2016, balance sheet? Years ago, investor had purchased a debt security of Investee and had classified it as Held-to-Maturity. Investor earned $1,000 in interest revenue from this investment in 2019. At the end of 2019, the amortized cost of this investment was $93,000 and its fair value was $97,000.
What should be the carrying value of this investment on Investors 2019 Balance Sheet?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started