Phillips Company bought 40 percent ownership in Jones Bag Company on January 1, 20X1, at underlying book value. During the perlod of January 1, 20X1. through December 31, 20X3, the market value of Phillips' Investment In Jones' stock Increased by $2,000 each year. In 20X1, 20X2, and 20X3, Jones Bag reported the following: Net Income $8,000 12,000 20,000 The balance in Phillips Company's Investment account on December 31, 20X3, was $54,000. Year 20X1 20X2 20X3 Required: In each of the following Independent cases, determine the amount that Phillips paid for its Investment in Jones Bag stock assuming that Phillips accounted for its Investment by carrying the Investment at fair value, or using the equity method. Dividends $ 15,000 10,000 10,000 Answer is complete but not entirely correct. 48,000 56,000 X Fair value Equity method S $
Phillips Company bought 40 percent ownership in Jones Bag Company on January 1, 20X1, at underlying book value. During the perlod of January 1, 20X1. through December 31, 20X3, the market value of Phillips' Investment In Jones' stock Increased by $2,000 each year. In 20X1, 20X2, and 20X3, Jones Bag reported the following: Net Income $8,000 12,000 20,000 The balance in Phillips Company's Investment account on December 31, 20X3, was $54,000. Year 20X1 20X2 20X3 Required: In each of the following Independent cases, determine the amount that Phillips paid for its Investment in Jones Bag stock assuming that Phillips accounted for its Investment by carrying the Investment at fair value, or using the equity method. Dividends $ 15,000 10,000 10,000 Answer is complete but not entirely correct. 48,000 56,000 X Fair value Equity method S $
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:Phillips Company bought 40 percent ownership In Jones Bag Company on January 1, 20X1, at underlying book value. During the
perlod of January 1, 20X1, through December 31, 20X3, the market value of Phillips' Investment In Jones' stock Increased by $2,000
each year. In 20X1, 20X2, and 20X3, Jones Bag reported the following:
Year
20X1
Net Income
$ 8,000
12,000
20,000
The balance in Phillips Company's Investment account on December 31, 20X3, was $54,000.
20X2
20X3
Dividends
$ 15,000
10,000
10,000
Required:
In each of the following Independent cases, determine the amount that Phillips paid for its Investment In Jones Bag stock assuming
that Phillips accounted for its Investment by carrying the Investment at fair value, or using the equity method.
Answer is complete but not entirely correct.
48,000
55,000 x
Fair value
Equity method
$
S
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