Chapter 9 - Investments - Equity Question On Jan 1, 2017 Radka Corp bought 250 shares of the available 1,000 common shares of Bob's Bubble This provided Radka Corp with significant influence. Purchase paid was $550,000 The following were assets and liabilities at the time of acquisition: Bob's Bubbles Assets (not subject to amortization) Assets (15 years remaining) Liabilities Net Assets During the year Bob's Bubbles had the following results Net income Cash dividends paid out BV FV Difference 1,087,500 1,117,500 30,000 750,000 1,050,000 300,000 (225,000) (225,000) 1,612,500 1,942,500 330,000 + 109,500 85,000 20 21 Requirement #1 - Calculate any goodwill paid on the purchase 22 Requirement #2 - Calculate the net income to include on the investor's books Bob's net income 109.500 7 22,375 8 Requirement #3 - Calculate the entry to record the purchase of the shares on January 1, 2017 9 Investment Bob's Bubble I 550,000 42 43 Requirement #4 - Record the dividends received by Radka in 2017 44 Cash 21 250 47 Record the cash dividends received 48 Requirement #5 - Record the investment income for Radka in 2017 Investment - Rob's Bubbles 49 27.375 Record the net income inclusion 52 53 Requirement #5 - What is the balance of the investment on Radka's Balance sheet at the end of 2017? 54 55 Opening balance Dividende rocaivad 550,000 731 360