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Airida [17]
3 years ago
14

On January 1, Puckett Company paid $1.6 million for 50,000 shares of Harrison's voting common stock, which represents a 40 perce

nt investment. No allocation to goodwill or other specific account was made. Significant influence over Harrison is achieved by this acquisition and so Puckett applies the equity method. Harrison distributed a dividend of $2 per share during the year and reported net income of $560,000. What is the balance in the Investment in Harrison account found in Puckett's financial records as of December 31?
Business
1 answer:
Studentka2010 [4]3 years ago
6 0

Answer:  the correct answer is $1,724,000

Explanation: $560,000 x 0.40= 224,000  (net income times percentage of Harrison's voting common stock)

$2/ share x 50,000= (100,000)  (the company paid 2$ dollars per share and there are 50000 shares)

1.6 million + 224,000 - 100,000= $1,724,000

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