Answer:
the end of year book value would be $5,160,000.
Explanation:
given data
equity method to account = 40%
ABC paid investment = $5,000,000
total book value = $6,000,000
solution
when there are more than 20% stake in other company
than we apply equity method
so here we use
Amount of investment = $5,000,000
Share in net incom (600,000 x 40%) = $240,000
Share in the dividend (200,000 x 40%) = -$80,000
Book value at the end of the year = $5,160,000
So the end of year book value would be $5,160,000.
