During January 2018, Varren, Inc. acquired 30% of the outstanding common stock of Wolf Co. for $1,400,000. This investment gave Varren the ability to exercise significant influence over Wolf. Wolf's assets on that date were recorded at $6,400,000 with liabilities of $3,000,000. Any excess of cost over book value of Varren's investment was attributed to unrecorded patents having a remaining useful life of ten years. In 2018, Wolf reported net income of $600,000. For 2019, Wolf reported net income of $750,000. Dividends of $200,000 were paid in each of these two years. What was the reported balance of Varren's Investment in Wolf Co. at December 31, 2019?
During January 2018, Varren, Inc. acquired 30% of the outstanding common stock of Wolf Co. for $1,400,000. This investment gave Varren the ability to exercise significant influence over Wolf. Wolf's assets on that date were recorded at $6,400,000 with liabilities of $3,000,000. Any excess of cost over book value of Varren's investment was attributed to unrecorded patents having a remaining useful life of ten years. In 2018, Wolf reported net income of $600,000. For 2019, Wolf reported net income of $750,000. Dividends of $200,000 were paid in each of these two years. What was the reported balance of Varren's Investment in Wolf Co. at December 31, 2019?
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
Chapter13: Investments And Long-term Receivables
Section: Chapter Questions
Problem 8MC
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During January 2018, Varren, Inc. acquired 30% of the outstanding common stock of Wolf Co. for $1,400,000. This investment gave Varren the ability to exercise significant influence over Wolf. Wolf's assets on that date were recorded at $6,400,000 with liabilities of $3,000,000. Any excess of cost over book value of Varren's investment was attributed to unrecorded patents having a remaining useful life of ten years.
In 2018, Wolf reported net income of $600,000. For 2019, Wolf reported net income of $750,000. Dividends of $200,000 were paid in each of these two years. What was the reported balance of Varren's Investment in Wolf Co. at December 31, 2019?
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