On January 1, 2020, Choco Co. pays $96,000 to acquire 30% of the voting common stock of Cake Inc.  Choco uses the equity method to account for its investment.  At the time of the investment, Cake had net assets with a book value of $240,000 and with one undervalued net asset building which is undervalued in book by $30,000 (remaining useful life 15 years on 1/1/20). During 2020, Cake reported net income of $100,000 and paid dividends of $60,000.  Any excess cost over book value is attributable to goodwill with an indefinite life.   3) What is the balance in Choco’s investment account at December 31, 2020? Show your calculation (can show journal entries)

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A:

Q: At the beginning of 2021, Gala company purchased equity securities to held for trading for…

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A: a)

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A:

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A: Part 1:

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Consolidation

Consolidation in general examination implies an asset oscillating between well-defined methods of trading status. Consolidation is commonly known as market indecisiveness, which completes when the asset's values move forward or backward the trading structure.