Question
QUESTION 5 Essex Co purchased 1,000 shares of BBC Co, representing 10% of BBC, for $15 per share on January 1. During the year, BBC
QUESTION 5 Essex Co purchased 1,000 shares of BBC Co, representing 10% of BBC, for $15 per share on January 1. During the year, BBC paid dividends of $.75 per share and reported net income of $40,000. The share price at the end of the year was $16.50 What would be the value of the investment on the B/S reported by Essex if they used the fmv method of accounting for their BBC holdings? What would they report as the investment value if they used the equity method?
$16,500 for fmv method; $18,250 for equity method
$15,000 for fmv method; $15,000 for equity method
$18,250 for fmv method; $16,500 for equity method
$16,500 for fmv method; $19,750 for equity method
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