Darlene Inc. purchased 23,600 common shares (20%) of Carlyle Ltd. on January 1, Year 4, for $306,800. It did not have significant influence over Carlyle. It elected to classify the investment as fair value through OCI. On September 30, Year 5, Darlene obtained significant influence when there was a restructuring of the Board of Directors. Accordingly, Darlene adopted the equity method on prospective basis. Additional information on Carlyle for the two years ending December 31, Year 5, is as follows: Period Year 4 Jan.-Sept. Year 5 Oct.-Dec. Year 5 Period Year 4 Net Income $186,000 146,000 59,000 Jan.-Sept. Year 5 Oct.-Dec. Year 5 Dividends Paid $126,000 106,000 29,000 On January 1, Year 6, Darlene sold its investment in Carlyle for $354,000. Required: (a) Calculate the balance in the investment account at the end of each period. (Omit $ sign in your response.) Market value per share at end of period $14.00 14.60 15.00 Investment $ 330400 $ 344560 $
Darlene Inc. purchased 23,600 common shares (20%) of Carlyle Ltd. on January 1, Year 4, for $306,800. It did not have significant influence over Carlyle. It elected to classify the investment as fair value through OCI. On September 30, Year 5, Darlene obtained significant influence when there was a restructuring of the Board of Directors. Accordingly, Darlene adopted the equity method on prospective basis. Additional information on Carlyle for the two years ending December 31, Year 5, is as follows: Period Year 4 Jan.-Sept. Year 5 Oct.-Dec. Year 5 Period Year 4 Net Income $186,000 146,000 59,000 Jan.-Sept. Year 5 Oct.-Dec. Year 5 Dividends Paid $126,000 106,000 29,000 On January 1, Year 6, Darlene sold its investment in Carlyle for $354,000. Required: (a) Calculate the balance in the investment account at the end of each period. (Omit $ sign in your response.) Market value per share at end of period $14.00 14.60 15.00 Investment $ 330400 $ 344560 $
Chapter8: Consolidated Tax Returns
Section: Chapter Questions
Problem 36P
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Question
Transcribed Image Text:Darlene Inc. purchased 23,600 common shares (20%) of Carlyle Ltd. on January 1, Year 4, for $306,800. It did not have significant
influence over Carlyle. It elected to classify the investment as fair value through OCI. On September 30, Year 5, Darlene obtained
significant influence when there was a restructuring of the Board of Directors. Accordingly, Darlene adopted the equity method on
prospective basis.
Additional information on Carlyle for the two years ending December 31, Year 5, is as follows:
Period
Year 4
Jan. Sept. Year 5
Oct.-Dec. Year 5
Net Income
$186,000
146,000
59,000
Period
Year 4
Jan. Sept. Year 5
Oct. -Dec. Year 5
Dividends
Paid
$126,000
106,000
29,000
On January 1, Year 6, Darlene sold its investment in Carlyle for $354,000.
Required:
(a) Calculate the balance in the investment account at the end of each period. (Omit $ sign in your response.)
Investment
$330400
Market value
per share at
end of period
$ 344560
$
$14.00
14.60
15.00
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