If Apenhuizen sells its entire investment in Bergweide on January 1, 2021, for € 300,000 cash, what is the impact on Apenhuizen’s income?
Apenhuizen acquires 20 percent of the outstanding voting shares of Bergweide on January 1, 2019, for € 210,000 and applies the equity method in accounting for this investment. Bergweide has a book value of € 900,000 at January 1, 2019, and records net income of € 210,000 during 2019 and € 230,000 in 2020. Bergweide declared and paid dividends of € 100,000 in each of these years.
On the acquisition date the book values of Bergweide’s asset and liability accounts are considered as equal to fair values except for a copyright whose value accounted for Apenhuizen’s excess cost in the acquisition. The copyright had a remaining life of 15 years at January 1, 2019.
If Apenhuizen sells its entire investment in Bergweide on January 1, 2021, for € 300,000 cash, what is the impact on Apenhuizen’s income?
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