Ajax Beverages holds 40% of the stock of Bubbly Bottler, acquired at a cost equal to...
Ajax Beverages holds 40% of the stock of Bubbly Bottler,
acquired at a cost equal to 40% of Bubbly's book value at the time
of purchase. This is a significant influence investment. At the
start of 2021, Ajax reports the investment at a balance of
$100,000. In 2021, Bubbly reports net income of $1,000 and $50 in
other comprehensive income. Bubbly pays no dividends in 2021. The
market value of Ajax's investment in Bubbly stock increases by $500
during 2021.
At what amount does Ajax report the investment at the end of
2021?
A. $100,500
B. $100,420
C. $100,400
D. $100,450
Homework Answers
| Amount paid for investment | 100000 | |
| Add: Share of net income | 400 | =1000*40% |
| Add: Share of other comprehensive income | 20 | =50*40% |
| Investment at the end of 2021 | 100420 | |
| Option B $100,420 is correct |
| Market value of investment is not considered under Equity method. |
Add Answer to:
Ajax Beverages holds 40% of the stock of Bubbly Bottler,
acquired at a cost equal to...
Ajax Beverages holds 40% of the stock of Bubbly Bottler, acquired at a cost equal to...
Ajax Beverages holds 40% of the stock of Bubbly Bottler, acquired at a cost equal to 40% of Bubbly's book value at the time of purchase. This is a significant influence investment. At the start of 2021, Ajax reports the investment at a balance of $100,000. In 2021, Bubbly reports net income of $1,000 and $50 in other comprehensive income. Bubbly pays no dividends in 2021. The market value of Ajax's investment in Bubbly stock increases by $500 during 2021....
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