On January 1, 2013, an investor purchases 14,000 common shares of an investee at $12 (cash) per
Fantastic news! We've Found the answer you've been seeking!
Question:
- On January 1, 2013, an investor purchases 14,000 common shares of an investee at $12 (cash) per share. The shares represent 20% ownership in the investee. The investee shares are not considered "marketable" because they do not trade on an active exchange. On January 1, 2013, the book value of the investee's assets and liabilities equals $900,000 and $200,000, respectively. On that date, the appraised fair values of the investee's identifiable net assets approximated the recorded book values, except for a customer list. On January 1, 2013, the customer list had a recorded book value of $0, an estimated fair value equal to $50,000 and a 5 year remaining useful life. During the year ended December 31, 2013, the investee company reported net income equal to $42,000 and dividends equal to $20,000.
Noncontrolling investment accounting (price different from book value)
Assume the investor can exert significant influence over the investee. Determine the balance in the "Investment in Investee" account at December 31, 2013.
$190,000
$172,400
$170,400
$168,000
Related Book For
Intermediate accounting
ISBN: 978-0077647094
7th edition
Authors: J. David Spiceland, James Sepe, Mark Nelson
Posted Date: