On January 1, 2012, Cale Corp. paid $1,020,000 to acquire Kaltop Co. Kaltop maintained separate incorporation. Cale
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On January 1, 2012, Cale Corp. paid $1,020,000 to acquire Kaltop Co.
Kaltop maintained separate incorporation.
Cale used the equity method to account for the investment.
The following information is available for Kaltop's assets, liabilities, and stockholders' equity accounts on January 1, 2012:
| Book Value | Fair Value | |
|---|---|---|
| Current Assets | $120,000 | $120,000 |
| Land | 72,000 | 192,000 |
| Building ( twenty year life ) | 240,000 | 268,000 |
| Equipment (ten year life) | 540,000 | 516,000 |
| Current Liabilities | 24,000 | 24,000 |
| Long-term liabilities | 120,000 | 120,000 |
| Common Stock | 228,000 | |
| Additional paid-in capital | 384,000 | |
| Retained Earnings | 216,000 |
Kaltop earned net income for 2012 of $126,000 and paid dividends of $48,000 during the year.
What is the balance in Cale's investment in subsidiary account at the end of 2012?
a. $1,098,000.
b. $1,020,000.
c. $1,096,200.
d. $1,099,000.
e. $1,144,400.
Expert Answer:
A109900 The accounts outside of the general ledger offer the element for the stability stated in a w... View the full answer
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