On 1/1/2016, Wilson buys 25% of Taylormade for $500,000 and accounts for the investment using the equity
Question:
On 1/1/2016, Wilson buys 25% of Taylormade for $500,000 and accounts for the investment using the equity method. The carrying value of net assets at date of purchase totaled $1,800,000. Fair value and the carrying values of the acquired assets were same except for a factory with a 10 year useful life, which exceeded its carrying value by $150,000 and inventory which exceeded its carrying value by $50,000. The inventory was sold during 2016. (That is the fair value of Taylormade’s net assets were $2,000,000). During 2016, Taylormade reports net income of $200,000 and paid $40,000 cash dividend. What amount should Wilson report as the carrying amount for its investment in Taylormade at December 31 st
, 2016.
a.
$595,000
b.
$532,000
c.
$493,750
d.
$523,750
Modern Advanced Accounting In Canada
ISBN: 9781259066481
7th Edition
Authors: Hilton Murray, Herauf Darrell