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Intermediate Accounting: Reporting...
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Intermediate Accounting: Reporting...
On January 2, 2019, Portela Inc. bought 30% of the outstanding common stock of Bracero Corporation for $258,000 cash. Portela accounts for this investment by the equity method. At the date of acquisition of the stock, Bracero’s property, plant, and equipment had a fair value in excess of its book value of $150,000. Bracero’s property, plant, and equipment has a remaining life of 10 years. Bracero’s net income for the year ended December 31, 2019, was $180,000. During 2019, Bracero declared and paid cash dividends of $20,000. On December 31, 2019, Portela should have carried its investment in Bracero in the amount of:
- a. $258,000
- b. $301,500
- c. $306,000
- d. $312,000
Calculate the amount that Incorporation P should have carried its investment in Corporation B.
Investment: It refers to the process of using the currently held excess cash to earn profitable returns in future. The investments can be made in equity securities such as shares or debt securities such as bonds.
Calculate the amount that Incorporation P should have carried its investment in Corporation B.
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