Question
On January 1, 2010, Alpha purchased 25% of Beta Corp.'s common stock. $20,000 of this purchase is attributable to inventory that will be sold during
On January 1, 2010, Alpha purchased 25% of Beta Corp.'s common stock. $20,000 of this purchase is attributable to inventory that will be sold during the year. Alpha appropriately carries this investment using the equity method. The balance in Alphas investment account was $480,000 at December 31, 2010. Beta reported net income of $300,000 for the year ended December 31, 2010, and paid cash dividends totaling $120,000 during 2010. How much did Alpha pay on January 1, 2010 for its 25% interest in Beta?
a. $510,000
b. $455,000
c. $435,000
d. $585,000
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