On January 1, 2017, Vaughn Company purchased 12% bonds, having a maturity value of $312,000, for $335,654.22. The bonds provide
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Answer:
$280,950
Explanation:
As for the information given:
Closing balance of investment on 31 December 2015 = $440,000
Now the following adjustments need to be made to calculate the balance as on 1 August 2016
Add: Share of income from Jan to Jul 2016 = $4,000 7 months
20% = $5,600
Less: Dividend Received = $20,000 20% = $4,000
Less: Amortization of patent = $6,000/12 7 = $3,500
= $440,000 - $1,900 = $438,100
Since Jabiru sold half of its investment, thus, value of its half of the investment shall be:
$438,100/2 = $219,050
Sale value = $500,000
Thus, gain amount = $500,000 - $219,050 = $280,950