Franklin purchases 40 percent of Johnson Company on January 1 for $621,200. Although Franklin did not use it, this acquisition gave Franklin the ability to apply significant influence to Johnson’s operating and financing policies. Johnson reports assets on that date of $1,505,000 with liabilities of $536,000. One building with a seven-year remaining life is undervalued on Johnson’s books by $276,500. Also, Johnson’s book value for its trademark (10-year remaining life) is undervalued by $307,500. During the year, Johnson reports net income of $177,000 while declaring dividends of $110,000. What is the Investment in Johnson Company balance (equity method) in Franklin’s financial records as of December 31?
Franklin purchases 40 percent of Johnson Company on January 1 for $621,200. Although Franklin did not use it, this acquisition gave Franklin the ability to apply significant influence to Johnson’s operating and financing policies. Johnson reports assets on that date of $1,505,000 with liabilities of $536,000. One building with a seven-year remaining life is undervalued on Johnson’s books by $276,500. Also, Johnson’s book value for its trademark (10-year remaining life) is undervalued by $307,500. During the year, Johnson reports net income of $177,000 while declaring dividends of $110,000. What is the Investment in Johnson Company balance (equity method) in Franklin’s financial records as of December 31?
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