Franklin purchases 40 percent of Johnson Company on January 1 for $568,700. Although Franklin did not use it, this acquisition gave Franklin the ability to apply significant influence to Johnson's operating and financing policies. Johnson reports assets on that date of $1,462,000 with liabilities of $546,000. One building with a seven year life is undervalued on Johnson's books by $190,750. Also, Johnson's book value for its trademark (10-year life) is undervalued by $315,000. During the year, Johnson reports net income of $149,000 while declaring dividends of $80,000. What is the Investment in Johnson Company balance (equity method) in Franklin's financial records as of December 31? $572,800. $632,400. $596,300. $583,700.
Franklin purchases 40 percent of Johnson Company on January 1 for $568,700. Although Franklin did not use it, this acquisition gave Franklin the ability to apply significant influence to Johnson's operating and financing policies. Johnson reports assets on that date of $1,462,000 with liabilities of $546,000. One building with a seven year life is undervalued on Johnson's books by $190,750. Also, Johnson's book value for its trademark (10-year life) is undervalued by $315,000. During the year, Johnson reports net income of $149,000 while declaring dividends of $80,000. What is the Investment in Johnson Company balance (equity method) in Franklin's financial records as of December 31? $572,800. $632,400. $596,300. $583,700.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Franklin purchases 40 percent of Johnson Company on January 1 for $568,700.
Although Franklin did not use it, this acquisition gave Franklin the ability to apply
significant influence to Johnson's operating and financing policies. Johnson
reports assets on that date of $1,462,000 with liabilities of $546,000. One building
with a seven year life is undervalued on Johnson's books by $190,750. Also,
Johnson's book value for its trademark (10-year life) is undervalued by $315,000.
During the year, Johnson reports net income of $149,000 while declaring
dividends of $80,000. What is the Investment in Johnson Company balance
(equity method) in Franklin's financial records as of December 31?
$572,800.
$632,400.
$596,300.
$583,700.
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