Parent Inc. purchased all the outstanding shares of Sub Ltd. on January 1, Year 1, for $254,000. Amortization of the acquisition differential amounted to $12,000 in each of Years 1 and 2. Parent Inc. reported net income of $100,000 in Year 1 and $110,000 in Year 2 and paid $40,000 in dividends each year. Sub Ltd. reported net income of $35,000 in Year 1 and $37,000 in Year 2 and paid $6,000 in dividends each year. What is the Investment in Sub Ltd. balance on Parent's books as of December 31, Year 2, if the equity method has been used? Multiple Choice $298,000 $290,000 $288,000 $286,000
Parent Inc. purchased all the outstanding shares of Sub Ltd. on January 1, Year 1, for $254,000. Amortization of the acquisition differential amounted to $12,000 in each of Years 1 and 2. Parent Inc. reported net income of $100,000 in Year 1 and $110,000 in Year 2 and paid $40,000 in dividends each year. Sub Ltd. reported net income of $35,000 in Year 1 and $37,000 in Year 2 and paid $6,000 in dividends each year. What is the Investment in Sub Ltd. balance on Parent's books as of December 31, Year 2, if the equity method has been used? Multiple Choice $298,000 $290,000 $288,000 $286,000
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
ChapterA2: Investments
Section: Chapter Questions
Problem 25E
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Transcribed Image Text:Parent Inc. purchased all the outstanding shares of Sub Ltd. on January 1, Year 1, for $254,000. Amortization of the acquisition differential amounted to $12,000 in
each of Years 1 and 2. Parent Inc. reported net income of $100,000 in Year 1 and $110,000 in Year 2 and paid $40,000 in dividends each year. Sub Ltd. reported
net income of $35,000 in Year 1 and $37,000 in Year 2 and paid $6,000 in dividends each year. What is the Investment in Sub Ltd. balance on Parent's books as
of December 31, Year 2, if the equity method has been used?
Multiple Choice
O
$298,000
$290,000
$288,000
$286,000
X
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