On January 1, 2020 Pearl Company acquired 20 percent of the common stock of Safir Corporation for $200,000, at underlying book value. For the same year, Safir reported net income of $50,000. It paid $5,000 dividends during the year. At December 31, 2020, Pearl determined the fair value of the shares of Safir to be $189,000.

What amount would Pearl report as investment in Safir Corporation at the end of the year, if Pearl used the fair value method?

a.$189,000

b.$245,000

c.$200,000

d.$209,000

e.None

On January 1, 2020 Pearl Company acquired 20 percent of the common stock of Safir Corporation for $200,000, at underlying book value. For the same year, Safir reported net income of $50,000. It paid $5,000 dividends during the year. At December 31, 2020, Pearl determined the fair value of the shares of Safir to be $189,000.

What amount would Pearl report as investment in Safir Corporation at the end of the year, if Pearl used the equity method?

a.$200,000

b.$245,000

c.None

d.$189,000

e.$209,000