Question
Sajeda Company acquired 90% of Tamara Company. On January 1, 2020 in exchange for cash. The book value of Tamara's individual assets and liabilities approximated
Sajeda Company acquired 90% of Tamara Company. On January 1, 2020 in exchange for cash. The book value of Tamara's individual assets and liabilities approximated their acquisition-date fair values. On the date of acquisition, Tamara reported the following:
Cash $ 350,000 Current Liabilities $ 120,000
Inventory 100,000
Plant Assets (net) 320,000 Common Stock 100,000
Property 500,000 Retained Earnings 1,050,000
Total Assets $1,270,000 Total Liab & Equity $ 1,270,000
During the year, Tamara Inc. reported $310,000 in net income and declared $15,000 in dividends. Sajeda Company reported $520,000 in net income and declared $25,000 in dividends. Sajeda accounts for their investment using the equity method.
What is Sajeda's balance in "Investment in Tamara Inc." prior to consolidation on December 31, 2020?
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