On January 1, 2017, Peach, Inc. purchased 40% of the common stock of Apple Company for $61,000. At the date of acquisition, the following information for Apple Company was available: Fair Market Book Value Value Depreciable assets (remaining life, 10 years) $100,000 $105,000 Land 50,000 60,000 Total $150,000 $165,000 Liabilities $ 25,000 $ 25,000 Common stock 75,000 Retained earnings 50,000 Total $150,000 All of Apple Company's other assets had book values equal to their fair values. In 2017, Apple earned $18,000 of net income and distributed $12,500 of dividends. How much investment income would Peach record in 2017? $7,400 $7,000 $6,700 $7,200
On January 1, 2017, Peach, Inc. purchased 40% of the common stock of Apple Company for $61,000. At the date of acquisition, the following information for Apple Company was available: Fair Market Book Value Value Depreciable assets (remaining life, 10 years) $100,000 $105,000 Land 50,000 60,000 Total $150,000 $165,000 Liabilities $ 25,000 $ 25,000 Common stock 75,000 Retained earnings 50,000 Total $150,000 All of Apple Company's other assets had book values equal to their fair values. In 2017, Apple earned $18,000 of net income and distributed $12,500 of dividends. How much investment income would Peach record in 2017? $7,400 $7,000 $6,700 $7,200
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On January 1, 2017, Peach, Inc. purchased 40% of the common stock of Apple Company for $61,000. At the date of acquisition, the following information for Apple Company was available:
All of Apple Company's other assets had book values equal to their fair values. In 2017, Apple earned $18,000 of net income and distributed $12,500 of dividends. How much investment income would Peach record in 2017?
| Fair Market | ||
| Book Value | Value | |
| $100,000 | $105,000 | |
| Land | 50,000 | 60,000 |
| Total | $150,000 | $165,000 |
| Liabilities | $ 25,000 | $ 25,000 |
| Common stock | 75,000 | |
| 50,000 | ||
| Total | $150,000 |
All of Apple Company's other assets had book values equal to their fair values. In 2017, Apple earned $18,000 of net income and distributed $12,500 of dividends. How much investment income would Peach record in 2017?
$7,400
$7,000
$6,700
$7,200
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