On January 1, 2022, BrewBeans, a coffee company, perked up its portfolio by purchasing 35% of...

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On January 1, 2022, BrewBeans, a coffee company, perked up its portfolio by purchasing 35% of the outstanding stock of Fizz Pop, a soda manufacturer, for $10 million. FizzPop fizzed with success, reporting net incomes of $5 million in 2022 and $8 million in 2023. During 2022 and 2023, FizzPop distributed dividends to all shareholders, including BrewBeans. The dividends amounted to $2 million in 2022 and $3 million in 2023, of which BrewBeans received 35%. On December 31, 2023, BrewBeans decided to shift its focus and sold its investment in FizzPop for $12 million. When BrewBeans sells its investment, what amount will they credit (CR.) to the "Investment in Associates" account? On January 1, 2022, BrewBeans, a coffee company, perked up its portfolio by purchasing 35% of the outstanding stock of Fizz Pop, a soda manufacturer, for $10 million. FizzPop fizzed with success, reporting net incomes of $5 million in 2022 and $8 million in 2023. During 2022 and 2023, FizzPop distributed dividends to all shareholders, including BrewBeans. The dividends amounted to $2 million in 2022 and $3 million in 2023, of which BrewBeans received 35%. On December 31, 2023, BrewBeans decided to shift its focus and sold its investment in FizzPop for $12 million. When BrewBeans sells its investment, what amount will they credit (CR.) to the "Investment in Associates" account?

Answer rating: 100% (QA)

SOLUTION The Investment in Associates account is used to record the initial investment in FizzPop an... View the full answer