Homework Answers
Solution a:
| Computation of Investment to be reported On Dec 31, 2018 Balance Sheet | |
| Purchase Price | $25,59,000 |
| Equity Income Accrual ($775,000*31%) | $2,40,250 |
| OCI loss accrual ($1,020,000*31%) | -$3,16,200 |
| Dividends ($23,000*31%) | -$7,130 |
| Investment in Steel on December 31, 2018 | $24,75,920 |
Solution b:
Equity in earnings of Steel to be reported on 2018 Income Statement = Equity Income Accrual = $775000*31% = $240,250
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