Eton Corporation acquires 30% of the voting stock of Fairfield Company for $60,000,000 on January 1, 2019,
Question:
Eton Corporation acquires 30% of the voting stock of Fairfield Company for $60,000,000 on January 1, 2019, and classifies the investment as an equity method investment. At the time, the book value of the company was $200,000,000. Eton determined that the book value of Fairfield’s plant assets (15 year life, straight-line) were overstated by $10,000,000 and Fairfield had unreported intangible assets (5 year life, straight-line) with a fair value of $8,000,000. During 2019 Fairfield reported net income of $2,400,000 and declared and paid dividends of $1,000,000. Both companies have December 31 year-ends.
At what amount will Eton report its investment in Fairfield on its December 31, 2019 balance sheet?
Advanced Accounting
ISBN: 978-0538480284
11th edition
Authors: Paul M. Fischer, William J. Tayler, Rita H. Cheng