On January 1, 2020, Choco Co. pays $96,000 to acquire 30% of the voting common stock of Cake Inc. Choco uses the equity method to account for its investment. At the time of the investment, Cake had net assets with a book value of $240,000 and with one undervalued net asset building which is undervalued in book by $30,000 (remaining useful life 15 years on 1/1/20). During 2020, Cake reported net income of $100,000 and paid dividends of $60,000. Any excess cost over book value is attributable to goodwill with an indefinite life. 3) What is the balance in Choco’s investment account at December 31, 2020? Show your calculation (can show journal entries)
On January 1, 2020, Choco Co. pays $96,000 to acquire 30% of the voting common stock of Cake Inc. Choco uses the equity method to account for its investment. At the time of the investment, Cake had net assets with a book value of $240,000 and with one undervalued net asset building which is undervalued in book by $30,000 (remaining useful life 15 years on 1/1/20). During 2020, Cake reported net income of $100,000 and paid dividends of $60,000. Any excess cost over book value is attributable to goodwill with an indefinite life. 3) What is the balance in Choco’s investment account at December 31, 2020? Show your calculation (can show journal entries)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On January 1, 2020, Choco Co. pays $96,000 to acquire 30% of the voting common stock of Cake Inc. Choco uses the equity method to account for its investment. At the time of the investment, Cake had net assets with a book value of $240,000 and with one undervalued net asset building which is undervalued in book by $30,000 (remaining useful life 15 years on 1/1/20). During 2020, Cake reported net income of $100,000 and paid dividends of $60,000. Any excess cost over book value is attributable to
3) What is the balance in Choco’s investment account at December 31, 2020? Show your calculation (can show
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