Red Co. holds a long-term investment with a significant influence in Ashton, Inc. Red aquired 3,000 shares or 40%, of Ashton for $50,000. During 2010, Ashton had $30,000 of net income and in 2011, Ashton reported $40,000. No dividends were distributed in either year. Red will report book value of this investment on December 31, 2011

Answer is $78,000

Where did 78,000 come from?

Red Co. holds a long-term investment with a significant influence in Ashton, Inc. Red aquired 3,000 shares or 40%, of Ashton for $50,000. During 2010, Ashton had $30,000 of net income and in 2011, Ashton reported $40,000. No dividends were distributed in either year. Red will report book value of this investment on December 31, 2011 $78,000;