Sunland Company purchased 100 of the 1000 outstanding shares of Darby Company's common stock for $660000 on January 2, 2...
Sunland Company purchased 100 of the 1000 outstanding shares of
Darby Company's common stock for $660000 on January 2, 2018. During
2018, Darby Company declared dividends of $130000 and reported
earnings for the year of $460000.
If Sunland Company uses the equity method of accounting for its
investment in Darby Company, its Equity Investments (Darby) account
at December 31, 2018 should be
| $660000. |
| $693000. |
| $706000. |
| $647000. |
Homework Answers
Ownership percentage = 100/1000 = 10%
Equity investment account balance
= 660,000 + Share in earnings - Share in dividends
= 660,000 + (460,000*10%) - (130,000*10%)
= 660,000 + 46,000 - 13,000
= 693,000
Option B is the answer
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