Elston Company Balance Sheet December 31, 2004 Assets 800,000 Liabilities 100,000 Capitalstock 400,000 Retainedearnings 300,000 Totalequities 800,000 Alley Company Balance Sheet December 31, 2004 Assets 600,000 Liabilities 150,000 Capitalstock 370,000 Retainedearnings 80,000 Totalequities 600,000 1. If Elston Company acquired a 20% interest in Alley Company on December 31, 2004 for $130,000 and the fair value method of accounting for the investment were used, the amount of the debit to Investment in Alley Company Stock would have been $90,000. $74,000. $130,000. $120,000. 2. If Elston Company acquired a 30% interest in Alley Company on December 31, 2004 for $150,000 and the equity method of accounting for the investment were used, the amount of the debit to Investment in Alley Company Stock would have been $190,000. $150,000. $120,000. $135,000. 3. If Elston Company acquired a 20% interest in Alley Company on December 31, 2003 for $90,000 and during 2005 Barnes Company had net income of $50,000 and paid a cash dividend of $20,000, applying the fair value method would give a debit balance in the Investment in Alley Company Stock account at the end of 2005 of $74,000. $90,000. $100,000. $96,000. 4. If Elston Company acquired a 30% interest in Alley Company on December 31, 2004 for $135,000 and during 2005 Alley Company had net income of $50,000 and paid a cash dividend of $20,000, applying the equity method would give a debit balance in the Investment in Alley Company Stock account at the end of 2005 of $135,000. $144,000. $150,000. $145,000
Elston Company
December 31, 2004
Assets 800,000
Liabilities 100,000
Capitalstock 400,000
Retainedearnings 300,000
Totalequities 800,000
Alley Company
Balance Sheet
December 31, 2004
Assets 600,000
Liabilities 150,000
Capitalstock 370,000
Retainedearnings 80,000
Totalequities 600,000
1. If Elston Company acquired a 20% interest in Alley Company on December 31, 2004 for $130,000 and the fair value method of accounting for the investment were used, the amount of the debit to Investment in Alley Company Stock would have been
- $90,000.
- $74,000.
- $130,000.
- $120,000.
2. If Elston Company acquired a 30% interest in Alley Company on December 31, 2004 for $150,000 and the equity method of accounting for the investment were used, the amount of the debit to Investment in Alley Company Stock would have been
- $190,000.
- $150,000.
- $120,000.
- $135,000.
3. If Elston Company acquired a 20% interest in Alley Company on December 31, 2003 for $90,000 and during 2005 Barnes Company had net income of $50,000 and paid a cash dividend of $20,000, applying the fair value method would give a debit balance in the Investment in Alley Company Stock account at the end of 2005 of
- $74,000.
- $90,000.
- $100,000.
- $96,000.
4. If Elston Company acquired a 30% interest in Alley Company on December 31, 2004 for $135,000 and during 2005 Alley Company had net income of $50,000 and paid a cash dividend of $20,000, applying the equity method would give a debit balance in the Investment in Alley Company Stock account at the end of 2005 of
- $135,000.
- $144,000.
- $150,000.
- $145,000.
Trending now
This is a popular solution!
Step by step
Solved in 5 steps
