Ask Question
12 April, 21:27

On January 1, 2018, Green Corporation purchased 38% of the outstanding voting common stock of Gold Company for $ 300,950. The book value of the acquired shares was $ 275,900. The excess of cost over book value is attributable to an intangible asset on Gold's books that was undervalued and had a remaining useful life of five years. For the year ended December 31, 2018, Gold reported net income of $ 125,600 and paid cash dividends of $ 26,000. What is the carrying value of Green's investment in Gold at December 31, 2018?

+3
Answers (1)
  1. 12 April, 21:53
    0
    The carrying value of Green's investments as at 31st December 2018 is $356,654.2

    Explanation:

    In this question, we are asked to calculate the carrying value of Green's investments in gold as at December 31st, 2018.

    We proceed as follows; Firstly, we identify the following parameters;

    The investment in gold company as of January 1 2018 = $300,950

    The Depreciation in assets of gold company = $ (300,950-275,900) / 5 * 38% = $1903.8

    Share in cash dividend = 38% * 26,000 = $9,880

    Share in net income = 38% * 125,600 = $47,728

    Carrying value of green's investment as at December 31st 2018 = investment + share in cash dividend + share in net income - depreciation = 300,950 + 9,880 + 47,728 - 1903.8 = $356,654.2
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “On January 1, 2018, Green Corporation purchased 38% of the outstanding voting common stock of Gold Company for $ 300,950. The book value of ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers