On January 1, 2020, Bramble Co. purchased 22,000 shares (a 10% interest) in Elton John Corp. for $1,400,000. At the time, the book value and the fair value of John’s net assets were $12,000,000.
On July 1, 2021, Bramble paid $3,100,000 for 44,000 additional shares of John common stock, which represented a 20% investment in John. As a result of this transaction, Bramble owns 30% of John and can exercise significant influence over John’s operating and financial policies. (Any excess fair value is attributed to goodwill.)
John reported the following net income and declared and paid the following dividends.
Net Income | Dividend per Share | |||
---|---|---|---|---|
Year ended 12/31/20 | $740,000 | None | ||
Six months ended 6/30/21 | 530,000 | None | ||
Six months ended 12/31/21 | 792,000 | $1.70 |
Determine the ending balance that Bramble Co. should report as its investment in John Corp. at the end of 2021.
Investment in Elton John Corp. | $ |
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On January 1, 2020, Bramble Co. purchased 22,000 shares (a 10% interest) in Elton John Corp. for $1,400,000. At the time, the book value and the fair value of John’s net assets were $12,000,000. On July 1, 2021, Bramble paid $3,100,000 for 44,000 additio
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On January 1, 2017, Pearl Co. purchased 23,000 shares (a 10% interest) in Elton John Corp. for $1,330,000. At the time, the book value and the fair value of John’s net assets were $12,300,000. On July 1, 2018, Pearl paid $2,840,000 for 46,000 additional shares of John common stock, which represented a 20% investment in John. The fair value of John’s identifiable assets net of liabilities was equal to their carrying amount of $13,300,000. As a result of this transaction,...
On January 1, 2017, Bonita Co. purchased 24,000 shares (a 10% interest) in Elton John Corp. for $1.450.000. At the time, the book value and the fair value of John's net assets were $12,000,000. On July 1, 2018, Bonita paid $2,740,000 for 48,000 additional shares of John common stock, which represented a 20% investment in John. The fair value of John's identifiable assets net of liabilities was equal to their carrying amount of $13,200,000. As a result of this transaction,...
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