TunaCo purchases 25% of Stanley, Inc. on January 1 of the current year for $505,000. This acquisition
Question:
TunaCo purchases 25% of Stanley, Inc. on January 1 of the current year for $505,000. This acquisition gives TunaCo the ability to significantly influence Stanley's operating and financing policies. Stanley reports assets on that date of $1,600,000 with liabilities of $400,000. One building with a 15-year remaining life has a book value of $100,000 and a fair market value of $400,000. Any remaining excess must be Goodwill. During the current year, Stanley reports net income of $140,000 while paying dividends of $70,000. What is the Investment in Stanley account balance in TunaCo' accounting records at the end of the current year?
a. $500,000
b. $517,500
c. $530,000
d. $460,000
e. $512,500
Accounting Principles
ISBN: 978-0470534793
10th Edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso