Ace purchases 40 percent of Baskett Company on January 1 for $500,000. Although Ace did not use it, this acquisition gave Ace the ability to apply significant influence to Baskett’s operating and financing policies. Baskett reports assets on that date of $1,400,000 with liabilities of $500,000. One building with a seven-year life is undervalued on Baskett’s books by $140,000. Also, Baskett’s book value for its trademark (10-year life) is undervalued by $210,000. During the year, Baskett reportsnet income of $90,000 while paying dividends of $30,000. What is the Investment in Baskett Company balance (equity method) in Ace’s financial records as of December 31?
a. $504,000.
b. $507,600.
c. $513,900.
d. $516,000.

  • CreatedOctober 04, 2014
  • Files Included
Post your question