Wellington owns 30% of Boot, which it purchased on 1 May 20X7 for $2.5 million. At that date Boot had retained earnings of $5.3 million. At the year end date of 31 October 20X7 Boot had retained earnings of $6.4 million after paying out a dividend of $1 million. On 30 September 20X7 Wellington sold $700,000 of goods to Boot, on which it made 30% profit. Boot had resold none of these goods by 31 October. At what amount will Wellington record its investment in Boot in its consolidated statement of financial position at 31 October 20X7?
Wellington owns 30% of Boot, which it purchased on 1 May 20X7 for $2.5 million. At that date Boot had retained earnings of $5.3 million. At the year end date of 31 October 20X7 Boot had retained earnings of $6.4 million after paying out a dividend of $1 million. On 30 September 20X7 Wellington sold $700,000 of goods to Boot, on which it made 30% profit. Boot had resold none of these goods by 31 October. At what amount will Wellington record its investment in Boot in its consolidated statement of financial position at 31 October 20X7?
Chapter14: Choice Of Business Entity—operations And Distributions
Section: Chapter Questions
Problem 49P
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Wellington owns 30% of Boot, which it purchased on 1 May 20X7 for $2.5 million. At that date Boot
had
earnings of $6.4 million after paying out a dividend of $1 million. On 30 September 20X7 Wellington
sold $700,000 of goods to Boot, on which it made 30% profit. Boot had resold none of these goods by
31 October.
At what amount will Wellington record its investment in Boot in its consolidated
position at 31 October 20X7?
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