1. On January 1, 2019, Four Roses purchases 32,000 common shares of Makers Mark at $11 (cash) per share. The shares represent 24% ownership. Makers Marks common stock does not have a readily determinable fair value. On January 1, 2019, the book value of Makers Mark assets and liabilities equals $1,700,000 and $600,000, respectively. On that date, the appraised fair values of the Makers Mark identifiable net assets approximated the recorded book values, except for a customer list. On January 1, 2019, the customer list had a recorded book value of $0, an estimated fair value equal to $90,000 and a 5-year remaining useful life. During the year ended December 31, 2019, Makers Mark reported net income equal to $120,000 and dividends equal to $40,000. On December 31, 2019, the fair value of Makers Marks stock is $15 per share.

Assume Four Roses cannot exert significant influence over Makers Mark. Determine the balance in the Investment in Investee account on December 31, 2019.

1. $432,000
2. $366,880
3. $352,000
4. $480,000

ANSWER: _____________________

1. Based on the information in Question 5 above, assume Four Roses can exert significant influence over the Makers Mark. Determine the balance in the Investment in Investee account at December 31, 2019.

1. $432,000
2. $366,880
3. $352,000
4. $480,000

ANSWER: _____________________