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On January 1, 2022, an investor purchases for $320,000 a 15% ownership in an investee. The investee's common stock has a readily determinable fair value. On January 1, 2022, the book value of the investee's assets and liabilities equals $720,000 and $200,000 respectively. On that date, the appraised fair values of the investee's identifiable net assets approximated the recorded book values, except for a patent. On January 1, 2022, the patent had a recorded book value of $0 an estimated fair value equal to $64,000 and a 10 year remaining useful life. During the year ended December 31, 2022, the investee company reported net income equal to $48,000 and dividends equal to $32,000. On December 31, 2022, the fair value of the investor's share of the investee is $360,000. Assume the investor can exert significant influence over the investee. Determine the balance in the "Investment in Investee" account at December 31, 2022. Select one: O a. $376,000 O b. $320,000 O c. $321,440 O d. $360,000

On January 1, 2022, an investor purchases for $320,000 a 15% ownership in an investee. The investee's common stock has a readily determinable fair value. On January 1, 2022, the book value of the investee's assets and liabilities equals $720,000 and $200,000 respectively. On that date, the appraised fair values of the investee's identifiable net assets approximated the recorded book values, except for a patent. On January 1, 2022, the patent had a recorded book value of $0 an estimated fair value equal to $64,000 and a 10 year remaining useful life. During the year ended December 31, 2022, the investee company reported net income equal to $48,000 and dividends equal to $32,000. On December 31, 2022, the fair value of the investor's share of the investee is $360,000. Assume the investor can exert significant influence over the investee. Determine the balance in the "Investment in Investee" account at December 31, 2022. Select one: O a. $376,000 O b. $320,000 O c. $321,440 O d. $360,000

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On January 1, 2022, an investor purchases for $320,000 a 15% ownership in an investee. The investee's common stock has a readily determinable fair value. On January 1, 2022, the book value of the investee's assets and liabilities equals $720,000 and $200,000 respectively. On that date, the appraised fair values of the investee's identifiable net assets approximated the recorded book values, except for a patent. On January 1, 2022, the patent had a recorded book value of $0 an estimated fair value equal to $64,000 and a 10 year remaining useful life. During the year ended December 31, 2022, the investee company reported net income equal to $48,000 and dividends equal to $32,000. On December 31, 2022, the fair value of the investor's share of the investee is $360,000. Assume the investor can exert significant influence over the investee. Determine the balance in the "Investment in Investee" account at December 31, 2022. Select one: a. $376,000 b. $320,000 c. $321,440 d. $360,000
Transcribed Image Text:On January 1, 2022, an investor purchases for $320,000 a 15% ownership in an investee. The investee's common stock has a readily determinable fair value. On January 1, 2022, the book value of the investee's assets and liabilities equals $720,000 and $200,000 respectively. On that date, the appraised fair values of the investee's identifiable net assets approximated the recorded book values, except for a patent. On January 1, 2022, the patent had a recorded book value of $0 an estimated fair value equal to $64,000 and a 10 year remaining useful life. During the year ended December 31, 2022, the investee company reported net income equal to $48,000 and dividends equal to $32,000. On December 31, 2022, the fair value of the investor's share of the investee is $360,000. Assume the investor can exert significant influence over the investee. Determine the balance in the "Investment in Investee" account at December 31, 2022. Select one: a. $376,000 b. $320,000 c. $321,440 d. $360,000
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