QUESTION 14On January 1, 20X7, Poke Corporation acquired 25 percent of the outstanding shares of Shove Corporation for $100,000 cash. Shove Company reported net income of $75,000 and paid dividends of $30,000 for both 20X7 and 20X8. The fair value of shares held by Poke was $110,000 and $105,000 on December 31, 20X7 and 20X8 respectively.Based on the preceding information, what amount will be reported by Poke as balance in investment in Shove on December 31, 20X8, if it used the equity method of accounting? $122,500 $100,000 $108,250 $118,750

Solution: Share in income of shove in 20X7and 20X8 = $75,000*25% = $18,750 Share in dividend of…

Answered: On January 1, 20X7, Poke Corporation…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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QUESTION 14

On January 1, 20X7, Poke Corporation acquired 25 percent of the outstanding shares of Shove Corporation for $100,000 cash. Shove Company reported net income of $75,000 and paid dividends of $30,000 for both 20X7 and 20X8. The fair value of shares held by Poke was $110,000 and $105,000 on December 31, 20X7 and 20X8 respectively.

Based on the preceding information, what amount will be reported by Poke as balance in investment in Shove on December 31, 20X8, if it used the equity method of accounting?

$122,500

$100,000

$108,250

$118,750

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