On January 1, 2017, Pantera Company purchased 40% of Stratton Companys 30,000 shares of voting common stock
Question:
On January 1, 2017, Pantera Company purchased 40% of Stratton Company’s 30,000 shares of voting common stock for a cash payment of $1,800,000 when 40% of the net book value of Stratton Company was $1,740,000. The payment in excess of the net book value was attributed to depreciable assets with a remaining useful life of six years. As a result of this transaction Pantera has the ability to exercise significant influence over Stratton Company’s operating and financial policies. Stratton’s net income for the ended December 31, 2017 was $600,000. During 2017, Stratton paid $325,000 in dividends to its shareholders. The income reported by Pantera for its investment in Stratton should be:
What is the ending balance in Pantera’s investment account as of December 31, 2017?
a) 1,800,000
b) 1,900,000
c) 1,910,000
d) 2,030,000
Financial Reporting and Analysis
ISBN: 978-1259722653
7th edition
Authors: Lawrence Revsine, Daniel Collins, Bruce Johnson, Fred Mittelstaedt, Leonard Soffer