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
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
Vaughn Inc. acquired all of the outstanding common stock of Roberts Co. on January 1, 2020,...
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