Analyzing and Interpreting Equity Method Investments $($FSET$)$

Stober Company purchases an investment in Lang Company at a purchase price of $$1,500,000$ cash, representing $30\%$ of the outstanding stock and book value of Lang. During the year, Lang reports net income of $$150,000$ and pays cash dividends of $$60,000.$ At the end of the year, the fair value of Stober$$s investment is $$1,800,000.$

a$.$ At what amount is the investment reported on Stober$$s balance sheet at year$-$end? $Answer $1$

b$.$ What amount of income from investments does Stober report? $Answer $2$

c$.$ Record each of the transactions and events from above in the financial statement effects template.

Note: Use a negative sign with your answer, when appropriate.

Balance SheetIncome StatementCashNoncashContributedEarnedNetTransactionAsset$+$Assets$=$Liabilities$+$Capital$+$CapitalRevenues$-$Expenses$=$Incomei. Purchase stock in Lang Company.Answer $3$

Answer $4$

Answer $5$

Answer $6$

Answer $7$

Answer $8$

Answer $9$

Answer $10$

ii$.$ Recognize share of Lang income.Answer $11$

Answer $12$

Answer $13$

Answer $14$

Answer $15$

Answer $16$

Answer $17$

Answer $18$

iii. Receive dividend from Lang.Answer $19$

Answer $20$

Answer $21$

Answer $22$

Answer $23$

Answer $24$

Answer $25$

Answer $26$