Question

On January 1, 20X6, LJ Corporation purchased 20% of the outstanding shares of XYZ Corporation at a cost of $ 150,000. During the next two fiscal years, XYZ reported net income and dividends as follows:


Required
a) If LJ uses the cost method to account for its investments in XYZ, what would be the balance in the investment account at the end of fiscal year 20X7?
b) If LJ uses the equity method to account for its investment in XYZ, what would be the balance in LJ’s account called “Investment in XYZ” at December 31,20X7?


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  • CreatedMarch 13, 2015
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