Player Corporation purchased 100 percent of Scout Company's common stock on January 1, 20X 5, and paid $48,000 above book value. The full amount of the additional payment was attributed to amortizable assets with a life of four years remaining at January 1, 20X5. During 20X5 and 20X 6, Scout reported net income of $47,000 and $10,000 and paid dividends of $13,000 and $ 10,000, respectively. Player uses the equity method in accounting for its investment in Scout and reported a balance in its investment account of $165,000 on December 31, 20X6. Required: Compute the amount paid by Player to purchase Scout shares.
Player Corporation purchased 100 percent of Scout Company's common stock on January 1, 20X 5, and paid $48,000 above book value. The full amount of the additional payment was attributed to amortizable assets with a life of four years remaining at January 1, 20X5. During 20X5 and 20X 6, Scout reported net income of $47,000 and $10,000 and paid dividends of $13,000 and $ 10,000, respectively. Player uses the equity method in accounting for its investment in Scout and reported a balance in its investment account of $165,000 on December 31, 20X6. Required: Compute the amount paid by Player to purchase Scout shares.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:Player Corporation purchased 100 percent of Scout Company's common stock on January 1, 20X
5, and paid $48,000 above book value. The full amount of the additional payment was attributed
to amortizable assets with a life of four years remaining at January 1, 20X5. During 20X5 and 20X
6, Scout reported net income of $47,000 and $10,000 and paid dividends of $13,000 and $
10,000, respectively. Player uses the equity method in accounting for its investment in Scout and
reported a balance in its investment account of $165,000 on December 31, 20X6. Required:
Compute the amount paid by Player to purchase Scout shares.
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