Assume that, on January 1, 2021, Sycamore Corp. paid $2,040,000 for its investment in 36,000 shares of Starfish Inc. Further, assume that Starfish has 120,000 total shares of stock issued and estimates an eight-year remaining useful life and straight-line depreciation with no residual value for its depreciable assets. At January 1, 2021, the book value of Starfish's identifiable net assets was $7,060,000, and the fair value of Starfish was $10,0o00,000. The difference between Starfish's fair value and the book value of its identifiable net assets is attributable to $1,950,000 of land and the remainder to depreciable assets. Goodwill was not part of this transaction. The following information pertains to Starfish during 2021: $600,000 $360,000 Net Income Dividends declared and paid Market price of common stock on 12/31/2021 $ 80/share What amount would Sycamore Corp. report in its year-end 2021 balance sheet for its investment in Starfish Inc.? Multiple Choice $2,074,875. $2,220,000. $2,240,000.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Assume that, on January 1, 2021, Sycamore Corp. paid $2,040,000 for its investment in 36,000 shares of Starfish Inc. Further, assume that Starfish has
120,000 total shares of stock issued and estimates an eight-year remaining useful life and straight-line depreciation with no residual value for its
depreciable assets.
At January 1, 2021, the book value of Starfish's identifiable net assets was $7,060,000, and the fair value of Starfish was $10,000,000. The difference
between Starfish's fair value and the book value of its identifiable net assets is attributable to $1,950,000 of land and the remainder to depreciable
assets. Goodwill was not part of this transaction.
The following information pertains to Starfish during 2021:
Net Income
$600,000
Dividends declared and paid
$360,000
Market price of common stock on 12/31/2021
$
80/share
What amount would Sycamore Corp. report in its year-end 2021 balance sheet for its investment in Starfish Inc.?
Multiple Choice
$2,074,875.
$2,220,000.
$2,240,000.
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Transcribed Image Text:Assume that, on January 1, 2021, Sycamore Corp. paid $2,040,000 for its investment in 36,000 shares of Starfish Inc. Further, assume that Starfish has 120,000 total shares of stock issued and estimates an eight-year remaining useful life and straight-line depreciation with no residual value for its depreciable assets. At January 1, 2021, the book value of Starfish's identifiable net assets was $7,060,000, and the fair value of Starfish was $10,000,000. The difference between Starfish's fair value and the book value of its identifiable net assets is attributable to $1,950,000 of land and the remainder to depreciable assets. Goodwill was not part of this transaction. The following information pertains to Starfish during 2021: Net Income $600,000 Dividends declared and paid $360,000 Market price of common stock on 12/31/2021 $ 80/share What amount would Sycamore Corp. report in its year-end 2021 balance sheet for its investment in Starfish Inc.? Multiple Choice $2,074,875. $2,220,000. $2,240,000. < Prev 12 of 16 Next >
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