Exercise 22-22 On January 1, 2014, Beyonce Co. purchased 27,180 shares (a 10% interest) in Elton...

 

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Exercise 22-22 On January 1, 2014, Beyonce Co. purchased 27,180 shares (a 10% interest) in Elton John Corp. for $1,464,900. At the time, the book value and the fair value of John's net assets were $12,106,000. On July 1, 2015, Beyonce paid $2,955,700 for 54,360 additional shares of John common stock, which represented a 20% investment in John. The fair value of John's identifiable assets net of liabilities was equal to their carrying amount of $14,488,000. As a result of this transaction, Beyonce owns 30% of John and can exercise significant influence over John's operating and financial policies. Any excess fair value is attributed to goodwill. John reported the following net income and declared and paid the following dividends. Dividend per Share Net Income $877,000 None 465,600 None 880,100 $1 Determine the ending balance that Beyonce Co. should report as its investment in John Corp. at the end of 2015. Year ended 12/31/14 Six months ended 6/30/15 Six months ended 12/31/15 Investment in Elton John Corp. Click if you would like to Show Work for this question: Open Show Work Exercise 22-22 On January 1, 2014, Beyonce Co. purchased 27,180 shares (a 10% interest) in Elton John Corp. for $1,464,900. At the time, the book value and the fair value of John's net assets were $12,106,000. On July 1, 2015, Beyonce paid $2,955,700 for 54,360 additional shares of John common stock, which represented a 20% investment in John. The fair value of John's identifiable assets net of liabilities was equal to their carrying amount of $14,488,000. As a result of this transaction, Beyonce owns 30% of John and can exercise significant influence over John's operating and financial policies. Any excess fair value is attributed to goodwill. John reported the following net income and declared and paid the following dividends. Dividend per Share Net Income $877,000 None 465,600 None 880,100 $1 Determine the ending balance that Beyonce Co. should report as its investment in John Corp. at the end of 2015. Year ended 12/31/14 Six months ended 6/30/15 Six months ended 12/31/15 Investment in Elton John Corp. Click if you would like to Show Work for this question: Open Show Work

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Answer Answer Computation of the ending balance in the investment account of Elton John Corp Inv... View the full answer