Answered: Dec. 31, Year 2 Dec. 31, Year 1…

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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Question

Hawkeye Company’s balance sheet reported, under the equity method, its long-term investment in Raven Company for comparative years as follows:

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In addition, the Year 2 Hawkeye Company income statement disclosed equity earnings in the Raven Company investment as $25 million. Hawkeye Company neither purchased nor sold Raven Company stock during Year 2. The fair value of the Raven Company stock investment on December 31, Year 2, was $310 million. Explain the change in Investment in Raven Company Stock from December 31, Year 1, to December 31, Year 2.

Dec. 31, Year 2
Dec. 31, Year 1
Investment in Raven Company stock (in millions)
$281
$264

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