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At what amount should the investment be reported in Theron Co.'s year-end financi

At what amount should the investment be reported in Theron Co.'s year-end financi

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Theron Co. owns 15,000 shares out of the 100,000 outstanding shares of Eury, Inc. As of year- end, Theron holds 20,000 stock rights which enable Theron to acquire additional shares from Eury on a "2 rights for 1 share" basis. The stock rights are exercisable immediately. However, Theron Co.'s management does not intend to exercise the stock rights. Eury does not have any other stock rights outstanding aside from those held by Theron. Eury reports Page 9 of 10 year-end profit of 4,000,000 and declares cash dividends of 400,000. The investment has a carrying amount of 1,200,000 before any year-end adjustment. 20. At what amount should the investment be reported in Theron Co.'s year-end financial statements? a. 1,200,000 b. 1,800,000 c. 1,740,000 d. 1,849,200
Transcribed Image Text:Theron Co. owns 15,000 shares out of the 100,000 outstanding shares of Eury, Inc. As of year- end, Theron holds 20,000 stock rights which enable Theron to acquire additional shares from Eury on a "2 rights for 1 share" basis. The stock rights are exercisable immediately. However, Theron Co.'s management does not intend to exercise the stock rights. Eury does not have any other stock rights outstanding aside from those held by Theron. Eury reports Page 9 of 10 year-end profit of 4,000,000 and declares cash dividends of 400,000. The investment has a carrying amount of 1,200,000 before any year-end adjustment. 20. At what amount should the investment be reported in Theron Co.'s year-end financial statements? a. 1,200,000 b. 1,800,000 c. 1,740,000 d. 1,849,200
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