Right Company purchased 32,000 common shares (20%) of ON Inc. on January 1, Year 11, for...

 

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Right Company purchased 32,000 common shares (20%) of ON Inc. on January 1, Year 11, for $270,000. Right uses the equity method to report its investment in ON because it has significant influence in the operating and investing decisions made by ON. Right has no legal obligation to pay any of ON's liabilities and has not committed to contribute any more funds to ON. Additional information for ON for the four years ending December 31, Year 14, is as follows: Year Year 11 Year 12 Year 13 Year 14 Net Income $ 400,000 (500,000) (600,000) (700,000) Dividends Paid $80,000 80,000 Investment, beginning of year Cost Equity method income Dividends received Impairment loss Investment, end of year 0 0 Equity method income Impairment loss Total income Required: (a) Calculate the balance in the investment account for each of the Years 11 through 14. Assume that the market value is used in determining whether the investment is impaired. (Leave no cells blank - be certain to enter "0" wherever required. Negative amounts should be indicated by a minus sign. Enter your answers in thousands. Omit $ sign in your response.) Market Value per Share at December 31 $ $ $ Year 11 $14 6 80000 2 1 $ (b) Determine the total income to be reported by Right from its investment in ON for each of the Years 11 through 14. (Leave no cells blank - be certain to enter "0" wherever required. Negative amounts should be indicated by a minus sign. Enter your answers in thousands. Omit $ sign in your response.) Year 11. Year 12 Year 12 $ $ $ Year 13. Year 13. $ Year 14. 64 Year 14 0 0 Right Company purchased 32,000 common shares (20%) of ON Inc. on January 1, Year 11, for $270,000. Right uses the equity method to report its investment in ON because it has significant influence in the operating and investing decisions made by ON. Right has no legal obligation to pay any of ON's liabilities and has not committed to contribute any more funds to ON. Additional information for ON for the four years ending December 31, Year 14, is as follows: Year Year 11 Year 12 Year 13 Year 14 Net Income $ 400,000 (500,000) (600,000) (700,000) Dividends Paid $80,000 80,000 Investment, beginning of year Cost Equity method income Dividends received Impairment loss Investment, end of year 0 0 Equity method income Impairment loss Total income Required: (a) Calculate the balance in the investment account for each of the Years 11 through 14. Assume that the market value is used in determining whether the investment is impaired. (Leave no cells blank - be certain to enter "0" wherever required. Negative amounts should be indicated by a minus sign. Enter your answers in thousands. Omit $ sign in your response.) Market Value per Share at December 31 $ $ $ Year 11 $14 6 80000 2 1 $ (b) Determine the total income to be reported by Right from its investment in ON for each of the Years 11 through 14. (Leave no cells blank - be certain to enter "0" wherever required. Negative amounts should be indicated by a minus sign. Enter your answers in thousands. Omit $ sign in your response.) Year 11. Year 12 Year 12 $ $ $ Year 13. Year 13. $ Year 14. 64 Year 14 0 0

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Lets calculate the balance in the investment account for each of the years and the total income repo... View the full answer