Question
Problem 2. 1. On January 3, 2018, Jay Corp. acquired 40% of the outstanding common stock of Bob Corporation for $1,300,000. This acquisition gave
Problem 2. 1. On January 3, 2018, Jay Corp. acquired 40% of the outstanding common stock of Bob Corporation for $1,300,000. This acquisition gave Jay the ability to exercise significant influence over the investee. The book value of Bob Corporation was $2,430,000. Any excess cost over the underlying book value was assigned to a patent that was undervalued on Bob's balance sheet. This patent has a remaining useful life of ten years. For the year ended December 31, 2018, Bob reported net income of $342,000 and paid cash dividends of $98,000. Required: Prepare a schedule to show the balance Jay should report as its Investment in Bob Corporation at December 31, 2018.
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