Assume that, on January 1, 2021, Matsui Co. paid $1,029,600 for its investment in 46800 shares...
Assume that, on January 1, 2021, Matsui Co. paid $1,029,600 for its investment in 46800 shares of Yankee Inc. Further, assume that Yankee has 180000 total shares of stock issued. The book value and fair value of Yankee’s certificate net assets were both $360000 at January 1,2021. The following information pertains to Yankee during 2021?
| Net income | $180000 |
| Dividends declared and paid | $54000 |
| Market price of common stock on 12/31/2021 | $ 24/share |
What amount would Matsui in its year-end 2021 balance sheet for its investment in Yankee?
Homework Answers
| Answer |
| Explanation : |
| Answer |
| % of holding = 46,800 /180,000 = .2 or 26% |
| Investment value = cost +share in net income - dividend share |
| $10,29,600 + ($180,000*.26) -($54,000 *.26) |
| $10,29,600 + $46,800 - $14,040 |
| $10,62,360 |
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