On January 1, 2020, Beyonce Co. purchased 25,000 shares (a 10% interest) in Elton John Corp. for $1,400,000. At the time, the book value and the fair value of John's net assets were $13,000,000. On July 1, 2021, Beyonce paid $3,040,000 for 50,000 additional shares of John common stock, which represented a 20% investment in John. As a result of this transaction, Beyonce owns 30% of John and can exercise significant influence over John's operating and financial policies. John reported the following net income and declared and paid the following dividends.   Net Income Dividend per Share Year ended 12/31/20 $700,000 None Six months ended 6/30/21   500,000 None Six months ended 12/31/21   815,000 $1.55 Instructions Determine the ending balance that Beyonce Co. should report as its investment in John Corp. at the end of 2021.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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On January 1, 2020, Beyonce Co. purchased 25,000 shares (a 10% interest) in Elton John Corp. for $1,400,000. At the time, the book value and the fair value of John's net assets were $13,000,000.

On July 1, 2021, Beyonce paid $3,040,000 for 50,000 additional shares of John common stock, which represented a 20% investment in John. As a result of this transaction, Beyonce owns 30% of John and can exercise significant influence over John's operating and financial policies.

John reported the following net income and declared and paid the following dividends.

 
Net Income
Dividend per Share
Year ended 12/31/20
$700,000
None
Six months ended 6/30/21
  500,000
None
Six months ended 12/31/21
  815,000
$1.55

Instructions

Determine the ending balance that Beyonce Co. should report as its investment in John Corp. at the end of 2021.

 

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