Question: E 2 - 9 Fair Value Method Small Company reported 2 0 X 7 net income of $ 4 0 , 0 0 0 and

E2-9 Fair Value Method
Small Company reported 20X7 net income of $40,000 and paid dividends of $15,000 during the
year. Mock Corporation acquired 20 percent of Smalls shares on January 1,20X7, for $105,000.
At December 31,20X7, Mock determined the fair value of the shares of Small to be $121,000.
Mock reported operating income of $90,000 for 20X7.
Required
Compute Mocks net income for 20X7 assuming it uses
a. The cost method in accounting for its investment in Small.
b. The equity method in accounting for its investment in Small.
c. The fair value method in accounting for its investment in Small.

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Accounting Questions!

Q:

E 2 - 9 Fair Value Method Small Company reported 2 0 X 7 net income of $ 4 0 , 0 0 0 and paid dividends of $ 1 5 , 0 0 0 during the year. Mock Corporation acquired 2 0 percent of Small s shares on...

Q:

Small Company reported 2 0 7 net income of $ 4 0 , 0 0 0 and paid dividends of $ 1 5 , 0 0 0 during the year. Mock Corporation acquired 2 0 percent of Small's shares on January 1 , 2 0 7 , for $ 1 0...

Q:

Small Company reported 20X7 net income of $43,000 and paid dividends of $14,000 during the year. Mock Corporation acquired 30 percent of Small's shares on January 1, 20X7, for $99,000. At December...

Q:

Small Company reported 20X7 net income of $40,000 and paid dividends of $15,000 during the year. Mock Corporation acquired 20 percent of Smalls shares on January 1, 20X7, for $105,000. At December...

Q:

Small Company reported 2017 net income of $300,000 and paid dividends of $90,000 during the year. Parker Inc. acquired 20% of Small's outstanding voting stock on January 1, 2017 for $630,000. At...

Q:

Small Company reported 20X7 net income of $42,000 and paid dividends of $18,000 during the year. Mock Corporation acquired 30 percent of Smalls shares on January 1, 20X7, for $99,000. At December 31,...

Q:

Small Company reported 20X7 net income of $59,000 and paid dividends of $16,000 during the year. Mock Corporation acquired 30 percent of Small's shares on January 1, 20X7, for $97,000. At December...

Q:

Small Company reported 207 net income of $44,000 and paid dividends of $9,000 during the year. Mock Corporation acquired 30 percent of Small's shares on January 1, 20X7, for $98,000. At December 31,...

Q:

3. Small Company reported 207 net income of $51,000 and paid dividends of $19,000 during the year. Mock Corporation acquired 30 percent of Small's shares on January 1, 207, for $96,000. At December...

Q:

Prepare a word-processed report that describes and discusses the following worksheet results: The effects of alternative investment accounting methods on the parents trial balances and the final...

Q:

Click the 100 button. What do you about the atoms in the chamber

Q:

Jared Inc. produces leather handbags. The sales budget for the next four months is: July 5,000 units, August 7,000, September 7,500, October 8,000. Each handbag requires 0.5 square meters of leather....

Q:

Girls typically experience the adolescent growth spurt _ _ _ _ _ _ _ _ Blank than do boys. Multiple Choice 2 years later 2 years earlier 6 months earlier 6 months later

Q:

Human Resource Management ( HRM ) continues to evolve with the emergence of myriad changes that impact all levels of the organization. HRM s role has grown from primarily administrative - and...

Q:

Early in August an undergraduate college discovers that it can accommodate a few extra students. Enrolling those additional students would provide a substantial increase in revenue without increasing...

Q:

Shirley Ferguson, an insurance broker, believes that for a particular contact the probability of making a sale is 0.4. If the random variable X is defined to take the value 1 if a sale is made and 0...

Q:

4.28 A factory manager is considering whether to replace a temperamental machine. A review of past records indicates the following probability distribution for the number of breakdowns of this...