Gant Company purchased 20 percent of the outstanding shares of Temp Company for $84,000 on January 1, 20X6. The following results are reported for Temp Company: Net income Dividends paid Fair value of shares held by Gant: January 1 December 31 20x6 $ 44,000 10,000 a. Carries the investment at fair value. b. Uses the equity method. 84,000 103,000 20x7 $ 39,000 30,000 103,000 100,000 20x8 $ 53,000 15,000 100,000 111,000 Required: Determine the amounts reported by Gant as income from its investment in Temp for each year and the balance in Gant's investment in Temp at the end of each year assuming that Gant uses the following options in accounting for its investment in Temp:
Gant Company purchased 20 percent of the outstanding shares of Temp Company for $84,000 on January 1, 20X6. The following results are reported for Temp Company: Net income Dividends paid Fair value of shares held by Gant: January 1 December 31 20x6 $ 44,000 10,000 a. Carries the investment at fair value. b. Uses the equity method. 84,000 103,000 20x7 $ 39,000 30,000 103,000 100,000 20x8 $ 53,000 15,000 100,000 111,000 Required: Determine the amounts reported by Gant as income from its investment in Temp for each year and the balance in Gant's investment in Temp at the end of each year assuming that Gant uses the following options in accounting for its investment in Temp:
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Gant Company purchased 20 percent of the outstanding shares of Temp Company for $84,000 on January 1, 20X6. The following
results are reported for Temp Company:
Net income
Dividends paid
Fair value of shares held by Gant:
January 1
December 31
a. Carries the investment at fair value.
b. Uses the equity method.
Required A Required B
20X6
$ 44,000
10,000
Income from investment
Balance in investment
84,000
103,000
Required:
Determine the amounts reported by Gant as income from its investment in Temp for each year and the balance in Gant's investment in
Temp at the end of each year assuming that Gant uses the following options in accounting for its investment in Temp:
Complete this question by entering your answers in the tabs below.
20X6
20X7
$ 39,000
30,000
103,000
100,000
20X7
Required A
Determine the amounts reported by Gant as income from its investment in Temp for each year and the balance in Gant's
investment in Temp at the end of each year assuming that Gant uses the fair value option in accounting for its investment in
Temp.
20X8
$ 53,000
15,000
100,000
111,000
20X8
Required B >
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