Question
On January 1, 2016, Green Corporation purchased 25% of the outstanding voting common stock of Gold Company for $250,000. The book value of the acquired
On January 1, 2016, Green Corporation purchased 25% of the outstanding voting common
stock of Gold Company for $250,000. The book value of the acquired shares was $200,000.
The excess of cost over book value is attributable to an intangible asset on Gold's books that
was undervalued and had a remaining useful life of five years. For the year ended December
31, 2016, Gold reported net income of $100,000 and paid cash dividends of $20,000. What
is the carrying value of Green's investment in Gold at December 31, 2016?
A. $277,500
B. $250,000
C. $270,000
D. $267,500
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