ABC Company acquires a 10% ownership in XYZ Company on January 1, 2015. ABC Company does not have the ability to exert significant influence over XYZ. ABC properly records the Investment by using the fair-value method as an available-for-sale security. On January 1, 2017, ABC purchases another 30% of XYZ's outstanding shares, thereby achieving the ability to significantly influence XYZ's decisions. From 2015 through 2017, XYZ reports net income, declares and pays cash dividends and has fair values at Jan. 1 of each year as follows: Year Net income Cash Dividends Fair value at Jan. 1 2015 $1,000,000 2016 2,400,000 2017 3.000.000 200,000 600,000 800.000 $1,000,000 1,040,000 1.200.000

ABC Company acquires a 10% ownership in XYZ Company on January 1, 2015. ABC Company does not have the ability to exert significant influence over XYZ. ABC properly records the Investment by using the fair-value method as an available-for-sale security. On January 1, 2017, ABC purchases another 30% of XYZ's outstanding shares, thereby achieving the ability to significantly influence XYZ's decisions. From 2015 through 2017, XYZ reports net income, declares and pays cash dividends and has fair values at Jan. 1 of each year as follows: Year Net income Cash Dividends Fair value at Jan. 1 2015 $1,000,000 2016 2,400,000 2017 3.000.000 200,000 600,000 800.000 $1,000,000 1,040,000 1.200.000

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter12: Intangibles

Section: Chapter Questions

Problem 18E

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