In January 2020, Domingo, Inc., acquired 20 percent of the outstanding common stock of Martes, Inc., for $930,000. This investment gave Domingo the ability to exercise significant influence over Martes, whose balance sheet on that date showed total assets of $4,626,000 with liabilities of $926,000. Any excess of cost over book value of the investment was attributed to a patent having a remaining useful life of 10 years. In 2020, Martes reported net income of $195,000. In 2021, Martes reported net income of $236,250. Dividends of $81,000 were declared in each of these two years. What is the equity method balance of Domingo’s Investment in Martes, Inc., at December 31, 2021?
In January 2020, Domingo, Inc., acquired 20 percent of the outstanding common stock of Martes, Inc., for $930,000. This investment gave Domingo the ability to exercise significant influence over Martes, whose
In 2020, Martes reported net income of $195,000. In 2021, Martes reported net income of $236,250. Dividends of $81,000 were declared in each of these two years. What is the equity method balance of Domingo’s Investment in Martes, Inc., at December 31, 2021?
The equity method indicates determining the value of the investment by considering the income and expenses of the subsidiary company with respect to the portion of ownership acquired.
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