Vaughn Inc. acquired all of the outstanding common stock of Roberts Co. on January 1, 2020,...
Vaughn Inc. acquired all of the outstanding common stock of Roberts Co. on January 1, 2020, for $276,000. Annual amortization of $21,000 resulted from this acquisition. Vaughn reported net income of $80,000 in 2020 and $60,000 in 2021 and paid $24,000 in dividends each year. Roberts reported net income of $50,000 in 2020 and $57,000 in 2021 and paid $12,000 in dividends each year. What is the Investment in Roberts Co. balance on Vaughn's books as of December 31, 2021, if the equity method has been applied?
(K=thousand) Show work Please thank you
A. 326k
B383K
C. 368K
D. 317K
E 341K
Homework Answers
The answer is D. 317k
Calculation
Value of investment = amount paid to acquire - annual amortization + profits earned by robert co. - dividends paid
= 276,000 - 21,000 - 21,000 + 50,000 + 57,000 - 12,000 - 12,000
= 317,000
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Vaughn Inc. acquired all of the outstanding common stock of
Roberts Co. on January 1, 2020,...
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