Required: Compute the amount of investment income (loss) reported by Peace from its investment in Symbol for 20X2 and the balance in the investment account on December 31, 20X2, assuming the equity method is used in accounting for the investment. Note: If a loss occurs, enter the amount as a negative number.
Required: Compute the amount of investment income (loss) reported by Peace from its investment in Symbol for 20X2 and the balance in the investment account on December 31, 20X2, assuming the equity method is used in accounting for the investment. Note: If a loss occurs, enter the amount as a negative number.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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A
Transcribed Image Text:Peace Company issued common shares with a par value of $59,000 and a market value of $170,700 in exchange for 30 percent
ownership of Symbol Corporation on January 1, 20X2. Symbol reported the following balances on that date:
Assets
Cash
Accounts Receivable
Inventory (FIFO basis)
Land
Buildings & Equipment
Less: Accumulated Depreciation
Patent
Total Assets
Liabilities & Equities
Accounts Payable
SYMBOL CORPORATION
Balance Sheet
January 1, 20X2
Bonds Payable
Common Stock
Additional Paid-In Capital
Retained Earnings
Total Liabilities & Equities
Book Value
$ 55,000
98,000
Investment income (loss)
Balance in the investment account
124,000
57,000
507,000
(247,000)
$594,000
$ 27,000
149,000
149,000
20,000
249,000
$ 594,000
Fair Value
$ 55,000
98,000
154,000
72,000
329,000
37,000
$ 745,000
$ 27,000
149,000
The estimated economic life of the patents held by Symbol is 10 years. The buildings and equipment are expected to last 12 more
years on average. Symbol paid dividends of $10,000 during 20X2 and reported net income of $84,000 for the year.
Required:
Compute the amount of investment income (loss) reported by Peace from its investment in Symbol for 20X2 and the balance in the
investment account on December 31, 20X2, assuming the equity method is used in accounting for the investment.
Note: If a loss occurs, enter the amount as a negative number.
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