Question: Acme acquired a 10 interest in Becon for 1 000 on

Acme acquired a 10% interest in Becon for $1,000 on January 1, 2012. The investment in Becon is accounted for as fair value through profit or loss. Becon recognized an increase in fair value of $600 at the year ended December 31, 2012. On January 1, 2013, Acme acquired an additional 25% interest in Becon for $4,000 and achieved significant influence. The fair value of Becon's net assets was $5,000 at January 1, 2012, and increased to $8,000 at January 1, 2013. Becon recorded net income of $2,000 between January 1, 2012, and January 1, 2013.
Required
(a) Calculate the balance in the Investment in Associate account using the equity method at January 1, 2013.
(b) Calculate the amount of goodwill in the Investment in Associate account.

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  • CreatedJune 09, 2015
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