Question
Use the following facts for Multiple Choice problems 19 and 20 (each question is independent of the other): On January 1, 2016, an investor purchases
Use the following facts for Multiple Choice problems 19 and 20 (each question is independent of the other):
On January 1, 2016, an investor purchases 18,000 common shares of an investee at $12 (cash) per share. The shares represent 25% ownership in the investee. The investee shares are not considered marketable because they do not trade on an active exchange. On January 1, 2016, the book value of the investees assets and liabilities equals $650,000 and $170,000, respectively. On that date, the appraised fair values of the investees identifiable net assets approximated the recorded book values. During the year ended December 31, 2016, the investee company reported net income equal to $32,500 and dividends equal to $12,000.
19. Assume the investor does not exert significant influence over the investee. Determine the balance in the Investment in Investee account at December 31, 2016.
A. $216,000
B. $20,500
C. $228,000
D. $221,125
20. Assume the investor can exert significant influence over the investee. Determine the balance in the Investment in Investee account at December 31, 2016.
A. $216,000
B. $20,500
C. $228,000
D. $221,125
Use the following facts for Multiple Choice problems 19 and 20 (each question is independent of the other):
On January 1, 2016, an investor purchases 18,000 common shares of an investee at $12 (cash) per share. The shares represent 25% ownership in the investee. The investee shares are not considered marketable because they do not trade on an active exchange. On January 1, 2016, the book value of the investees assets and liabilities equals $650,000 and $170,000, respectively. On that date, the appraised fair values of the investees identifiable net assets approximated the recorded book values. During the year ended December 31, 2016, the investee company reported net income equal to $32,500 and dividends equal to $12,000.
19. Assume the investor does not exert significant influence over the investee. Determine the balance in the Investment in Investee account at December 31, 2016.
A. $216,000
B. $20,500
C. $228,000
D. $221,125
20. Assume the investor can exert significant influence over the investee. Determine the balance in the Investment in Investee account at December 31, 2016.
A. $216,000
B. $20,500
C. $228,000
D. $221,125
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Modernize Your Audit Department Five Critical Areas For Improvement
Authors: Toby DeRoche
1st Edition
B08FKW8B91, 979-8674160274
