Asked by garrett miles on May 08, 2024
Verified
What investment balance will be reported on Turtle's December 31,2019 balance sheet?
A) $150,000.
B) $162,000.
C) $160,500.
D) $170,500.
Equity Method
An accounting technique used to record an investor's proportional share of the investee company's income, expenses, and dividends received.
Investment Balance
The total value of all securities, such as stocks, bonds, and other investments, an individual or entity owns.
Cash Dividends
Earnings paid out to shareholders by a corporation, typically as a profit distribution.
- Ascertain the carrying amount of investments by employing the equity method.
Verified Answer
Initial investment cost = $150,000
Proportionate share of net income (30% x $40,000) = $12,000
Cash dividends received (30% x $5,000) = ($1,500)
Change in fair value of investment = $10,000
Total investment balance = $150,000 + $12,000 - $1,500 + $10,000 = $160,500
Therefore, the correct answer is C) $160,500.
Learning Objectives
- Ascertain the carrying amount of investments by employing the equity method.
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