Answered

Get the answers you need at Westonci.ca, where our expert community is always ready to help with accurate information. Discover comprehensive answers to your questions from knowledgeable professionals on our user-friendly platform. Discover in-depth answers to your questions from a wide network of professionals on our user-friendly Q&A platform.

Assume that, on January 1, 2021, Matsui Co. paid $2,958,000 for its investment in 87,000 shares of Yankee Inc. Further, assume that Yankee has 290,000 total shares of stock issued. The book value and fair value of Yankee's identifiable net assets were both $580,000 at January 1, 2021. The following information pertains to Yankee during 2021:

Net income $290,000
Dividends declared and paid $87,000
Market price of common stock on 12/31/2021 $36 /share

Required:
What amount would Matsui report in its year-end 2021 balance sheet for its investment in Yankee?

Sagot :

Parrain

Answer: $3,018,900

Explanation:

Amount to report is:

= Cost of investment + Share of Net income - Share of dividends

Share of Net income

= Percentage ownership * Net income

= 87,000 shares / 290,000 * 290,000

= $87,000

Share of Dividends

= 87,000 / 290,000 * 87,000

= $26,100

Amount to report:

= 2,958,000 + 87,000 - 26,100

= $3,018,900

Thanks for using our platform. We're always here to provide accurate and up-to-date answers to all your queries. Your visit means a lot to us. Don't hesitate to return for more reliable answers to any questions you may have. We're glad you chose Westonci.ca. Revisit us for updated answers from our knowledgeable team.