Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Sage, Inc. bought 35% of admas corporation's outstanding common stock on January 2, 20x1, for $400,000. The carrying amount of Adam's net assets at the

Sage, Inc. bought 35% of admas corporation's outstanding common stock on January 2, 20x1, for $400,000. The carrying amount of Adam's net assets at the purchase date totaled $900,000. Fair values and carrying amounts were the same for all items except for plant and inventory, for which fair values exceeded the carrying amounts by $90,000 and $10,000 respectively. The plant has an 18year remaining life. All inventory on hand at the beginning of the year was sold during 20x1. During 20x1, Adams reported $125,000 net income and paid a $20,000 cash dividend . What amounts should Sage report in its income statement related to its invensment in adams for the year ended December 31, 20x1, and what was the December 31, 20x1, balance in the investment in adams account?

A: Income Statement $43,750 and Balance Sheet $443,750

B: Income Statement $43,750 and Balance sheet $431,500

C: Income statement $38,500 and Balance sheet $443,750

D: Income Statement $43,750 and Balance sheet $436,750

E: Income statement $38,500 and Balance sheet $431,500

E:

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Finance

Authors: Ehsan Nikbakht, A A Groppelli

6th Edition

0764147595, 9780764147593

More Books

Students also viewed these Finance questions