Homework Answers
1) Acquisition cost of Interest $6500000
Less: Value of Stock ($4500000*90%) $4050000
Less: Value of Earning($1800000*90%) $1620000
Goodwill $830000
2) Value of Investment $6500000
Add: Income($240000*90%) $216000
Less: Dividend ($60000*90%) $54000
Total Value Of investment $6662000.
Allocation of Investment Amount in the ratio of Book Value and Implied values.
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