On January 1, 2020, Orange Co. purchased a 35% interest in Lemon Co. for $800,000. Orange reports this investment using the equity method because it has significant influence. Both companies have a December 31 year end and report under IFRS. For the year ended December 31, 2020, Lemon reported profit of $470,000 and paid total cash dividends of $50,000. The fair value of Orange’s 35% interest in Lemon at December 31, 2020, was $840,000. What is the value of Orange’s investment in Lemon as at December 31, 2020? Question 3 options: a) $947,000 b) $800,000 c) $840,000 d) $1,220,000
On January 1, 2020, Orange Co. purchased a 35% interest in Lemon Co. for $800,000. Orange reports this investment using the equity method because it has significant influence. Both companies have a December 31 year end and report under IFRS. For the year ended December 31, 2020, Lemon reported profit of $470,000 and paid total cash dividends of $50,000. The fair value of Orange’s 35% interest in Lemon at December 31, 2020, was $840,000. What is the value of Orange’s investment in Lemon as at December 31, 2020? Question 3 options: a) $947,000 b) $800,000 c) $840,000 d) $1,220,000
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
Chapter13: Investments And Long-term Receivables
Section: Chapter Questions
Problem 14RE
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On January 1, 2020, Orange Co. purchased a 35% interest in Lemon Co. for $800,000. Orange reports this investment using the equity method because it has significant influence. Both companies have a December 31 year end and report under IFRS.
- For the year ended December 31, 2020, Lemon reported profit of $470,000 and paid total cash dividends of $50,000.
- The fair value of Orange’s 35% interest in Lemon at December 31, 2020, was $840,000.
What is the value of Orange’s investment in Lemon as at December 31, 2020?
Question 3 options:
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