Question: ] (note: This Problem based on exercise E2-5): Kajais Company acquired a 30 percent interest in Maui on January 1 for $2,400,000 cash. Assume the
] (note: This Problem based on exercise E2-5): Kajais Company acquired a 30 percent interest in Maui on January 1 for $2,400,000 cash. Assume the cost of the investment equals the fair value of Mauis net assets. Kajais assigned the $600,000 fair value over book value of the interest acquired to the following assets
| Investment Cost | $2,400,000 | |
| Ownership Interest | 30% | |
| Excess of Fair Value over BV Assigned to: | ||
| Inventories | $120,000 | Sold in current year |
| Building | $240,000 | 4 year remaining life |
| Goodwill | $240,000 | |
| Total FV over BV | $600,000 |
During the year Maui reported net income and dividends as follows:
| Net Income | $960,000 |
| Dividends | $240,000 |
REQUIRED
a. Determine Kajaiss income from Maui.
b. Determine the December 31 balance of the Investment in Maui account.
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