Advanced Accounting
Advanced Accounting
14th Edition
ISBN: 9781260247824
Author: Joe Ben Hoyle, Thomas F. Schaefer, Timothy S. Doupnik
Publisher: RENT MCG
Question
Book Icon
Chapter 1, Problem 7P
To determine

Introduction: The equity method of accounting is a method where the investment is recognized at cost initially and thereafter accounted for based on the change in the investor’s share in investee net assets. The share in the investee’s profit or loss is included in the investor's profit or loss.

The equity method balance of D’s investment in M Inc. on December 31, 2021.

Blurred answer
Students have asked these similar questions
In January 2020, Domingo, Inc., acquired 20 percent of the outstanding common stock of Martes, Inc., for $930,000. This investment gave Domingo the ability to exercise significant influence over Martes, whose balance sheet on that date showed total assets of $4,626,000 with liabilities of $926,000. Any excess of cost over book value of the investment was attributed to a patent having a remaining useful life of 10 years.   In 2020, Martes reported net income of $195,000. In 2021, Martes reported net income of $236,250. Dividends of $81,000 were declared in each of these two years. What is the equity method balance of Domingo’s Investment in Martes, Inc., at December 31, 2021?
In January 2020, Domingo, Inc., acquired 20 percent of the outstanding common stock of Martes, Inc., for $856,000. This investment gave Domingo the ability to exercise significant influence over Martes, whose balance sheet on that date showed total assets of $4,634,000 with liabilities of $974,000. Any excess of cost over book value of the investment was attributed to a patent having a remaining useful life of 10 years.   In 2020, Martes reported net income of $259,000. In 2021, Martes reported net income of $302,250. Dividends of $73,000 were declared in each of these two years. What is the equity method balance of Domingo’s Investment in Martes, Inc., at December 31, 2021?   Multiple Choice   $914,250.   $1,001,850.   $1,014,250.   $939,050.
In January 2020, Marcus, Inc., acquired 20 percent of the outstanding common stock of Lily, Inc., for $769,000. This investment gave Marcus the ability to exercise significant influence over Lily, whose balance sheet on that date showed total assets of $4,199,000 with liabilities of $909,000. Any excess of cost over book value of the investment was attributed to a patent having a remaining useful life of 10 years. In 2020, Lily reported net income of $222,000. In 2021, Lily reported net income of $268,250. Dividends of $79,000 were declared in each of these two years. What is the equity method balance of Marcus's Investment in Lily, Inc., at December 31, 2021? Multiple Choice $919,150. $813,250. $835,450. $908,050.
Knowledge Booster
Background pattern image
Similar questions
SEE MORE QUESTIONS
Recommended textbooks for you
Text book image
CONCEPTS IN FED.TAX., 2020-W/ACCESS
Accounting
ISBN:9780357110362
Author:Murphy
Publisher:CENGAGE L
Text book image
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning