Answer:
$512,500
Explanation:
Data provided in the question:
Percentage of Stanley, Inc purchased by TunaCo = 25%
Amount for which the TunaCo purchased = $500,000
Assets on Stanley = $160,000
Liabilities of Stanley = $400,000
Useful life of building = 15 years
Book value of the building = $100,000
Fair market value = $400,000
Net income reported by Stanley = $140,000
Dividend paid = $70,000
Now,
Annual depreciation = [Fair value - Book value] ÷ Useful life
= [ $400,000 - $100,000] ÷ 15
= 20,000
Now,
Total account balance of Stanley = Net income reported by Stanley - Annual depreciation - Dividend paid
= $140,000 - $20,000 - $70,000
= $50,000
Account balance of TunaCo = Initial investment + 25% of account balance of Stanley
= $500,000 + [ 25% of $50,000]
= $500,000 + $12,500
= $512,500
