The following is a summarized balance sheet of Imogene Company:

Imogene Company

Balance Sheet

As of December 31, 2014

Assets $900,000

Liabilities $225,000

Common stock ($0.50 par) 50,000

APIC common stock 505,000

Retained earnings 120,000

Total liabilities and equity $900,000

Gremlin, Inc. has decided to purchase shares of common stock of Imogene Company.

Required:

Compute the requested amounts under each of the following separate scenarios:

a/ Gremlin acquired a 10% interest in Imogene (10,000 common shares) on December 31, 2014 for $135,000. Imogene reported net income of $75,000 for 2015 and declared and paid cash dividends totaling $30,000 during the year. Imogenes common stock was trading at $13 per share at December 31, 2015. What would be the carrying value in the investment account at December 31, 2015?

b/ Gremlin acquired a 30% interest in Imogene (30,000 common shares) on December 31, 2014 for $280,000. Imogene reported net income of $75,000 for 2015 and declared and paid cash dividends totaling $30,000 during the year. Imogenes common stock was trading at $13 per share at December 31, 2015. What would be the carrying value in the investment account at December 31, 2015?