Question
Phillips Company bought 30 percent ownership in Jones Bag Company on January 1, 20X1, at underlying book value. In 20X1, 20X2, and 20X3, Jones Bag
| Phillips Company bought 30 percent ownership in Jones Bag Company on January 1, 20X1, at underlying book value. In 20X1, 20X2, and 20X3, Jones Bag reported the following: |
| Year | Net Income | Dividends | ||||||
| 20X1 | $ | 24,000 | $ | 31,000 | ||||
| 20X2 | 28,000 | 26,000 | ||||||
| 20X3 | 36,000 | 26,000 | ||||||
| The balance in Phillips Companys investment account on December 31, 20X3, was $67,000. |
| Required: |
| In each of the following independent cases, determine the amount that Phillips paid for its investment in Jones Bag stock assuming that Phillips accounted for its investment using the cost method and equity method. |
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Audit Guide Audit Sampling
Authors: AICPA
2nd Edition
195068833X, 978-1950688333
