Essex Company issued common shares with a par value of $50,000 and a market value of $165,000 in exchange for 30 percent ownership of Tolliver Corporation on January 1, 20X2. Tolliver reported the following balances on that date:

The estimated economic life of the patents held by Tolliver is 10 years. The buildings and equipment are expected to last 12 more years on average. Tolliver paid dividends of $9,000 during 20X2 and reported net income of $80,000 for the year.

Compute the amount of investment income (loss) reported by Essex from its investment in Tolliver for 20X2 and the balance in the investment account on December 31, 20X2, assuming the equity method is used in accounting for theinvestment.

  • CreatedMay 23, 2014
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