1) At December 31, 2021, High Company has an equity portfolio valued at $200,000. Its cost was $120,000. If the Securities Fair Value Adjustment has a debit balance of $5,000, how much of an adjustment will be necessary at year end? 

2) On January 1, 2021 High Company purchased 40% of the outstanding common stock of Low, Inc. and used the equity method to account for the investment. During 2021 Low, Inc. reported net income of $2,000,000 and distributed dividends of $400,000. The ending balance in the Investment in High Company account at December 31, 2021 was $1,000,000 after applying the equity method during 2021. What was the purchase price High Company paid for its investment in Low, Inc?

Answer rating: 100% (QA)

1Solution Amount Particulars in Cost of equity investment 120000 Less Credit bala... View the full answer