On January 2nd 2020 The Florida Company purchased 30% of the Idaho Company for $42,000. At...
On January 2nd 2020 The Florida Company purchased 30% of the Idaho Company for $42,000. At the time of the purchase, all of Idaho’s assets had a book value equal to their market value except for a building with a book value of $100,000 and a fair market value of $130,000. The building has a life of 10 years and no salvage value. During 2020, Idaho reported income of $10,000 and paid no dividends. What is the book value of Florida’s investment in Idaho on December 31st 2020?
Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer.
a
$42,000
b
$45,000
c
$39,000
d
$44,100
Homework Answers
option b, $45,000 is the right answer. because $42,000 is their book value at the opening. Florida have 30% of Idaho. So, 30% of Idaho's income is for Florida.
so, $10,000 * 30% = $3,000
that is, $42000 + $3,000 = $45,000
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