On January 2, 2024, Kate Inc. purchased 15,000 shares of Harry Co. for $150,000 giving Kate Inc. a 15% ownership of Harry . The fair value of the 15% investment was the same as the carrying value of the investment when, on January 1, 2025, Kate Inc. purchased an additional 25,000 shares (25%) of Harry for $300,000. This last purchase gave Kate Inc. the ability to apply significant influence over Harry. The book value of Harry on January 2, 2024 was $1,000,000. The book value of Harry on January 1, 2025, was $1,100,000. Any excess of cost over book value for this second transaction is assigned to a database and amortized over four years. Harry reports net income and dividends as follows. These amounts are assumed to have occurred evenly throughout the years Net Income Dividends 2024 $200,000 $ 50,000 2025 225,000 50,000 2026 250,000 60,000 On April 1, 2026just after its first dividend receiptKate Inc. sells 10,000 shares of its investment . What is the balance in the investment account for the 15% ownership interestat January 1 2025?

Answer rating: 100% (QA)

Kate Inc purchased 15000 shares of Harry Co on 122024 for 150000 giving it a 15 owner... View the full answer