Question
On January 2, 2021, Garner, Inc. bought 30% of the outstanding common stock of Moody, Inc. for $60 million cash. At the date of acquisition
On January 2, 2021, Garner, Inc. bought 30% of the outstanding common stock of Moody, Inc. for $60 million cash. At the date of acquisition of the stock, Moodys net assets had a book value and fair value of $180 million. Moodys net income for the year ended December 31, 2021, was $30 million. During 2021, Moody declared and paid cash dividends of $6 million. On December 31, 2021, the fair value of 100% of Moodys stock was $650 million. On December 31, 2021, Garners investment account should be reported at:
Answer 67.2
B)If the investment described in the previous question had been classified as available-for-sale, what effect would the investment have on Levels 2018 financial statements?
Multiple Choice
-
Total assets increased by $3 million.
-
Total assets increased by $7 million.
-
Shareholders equity increased by $1 million.
-
Net income increased by $7 million.
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