Question
On January 1 2012, Cypress Industries purchased 25% of the ordinary shares of Shane,Inc. The investment enables Cypress to exert significant influence over Shane, Inc.
On January 1 2012, Cypress Industries purchased 25% of the ordinary shares of Shane,Inc. The investment enables Cypress to exert significant influence over Shane, Inc. Duringthe year, Shane earned net income of 160,000 and paid dividends of 40,000 andCypress Industries earned net income of 280,000. At December 31, 2012, shares ofShane, Inc. were trading for 40 per share, and the value in the investment account onthe books of Cypress was 395,000. What amount did Cypress Industries pay for itsinvestment in Shane on January 1, 2012?
a.365,000
b.425,000
c.325,000
d.335,000
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Accounting and Finance An Introduction
Authors: Peter Atrill, Eddie McLaney
8th edition
129208829X, 1292088297, 978-1292088297
