Question

Bloomfield Bakers accounts for its investment in Clor Confectionary under the equity method. Bloomfield carried the Clor investment at $150,150 and $165,800 at December 31, 2017 and 2018, respectively. During 2018 Clor recognized $75,900 of net income and paid dividends of $20,900. Assuming that Bloomfield owned the same percentage of Clor throughout 2018, their percentage ownership must have been (Round your answer to the nearest whole percent):

Answer 1

Answer:

If we assume that in year 2018 , Bloomfield had same amount of percentage of ownership in Clor as they had in 2017 then in 2018 the amount of percentage that Bloomfield will held in Clor would be 28.45%.

Explanation:

Here it is given that we are to assume that Bloomfield accounts for its investment in Clor under the equity method and given investment in 2017 was $150,150 and investment in 2018 is $165,800.

So for calculating the amount of percentage we can assume that the percentage is X, and here we will add amount in 2017 with X% of ( net income - dividend declared ) to get the total amount in 2018.

$150,150 + X% ( $75,900 - $20,900 ) = $165,800

$150,150 + X% ( $55,000 ) = $165,800

X% (55,000) = $165,800 - $150,150

X% = 15,650 / 55,000

X% = .28454 ( MULTIPLYING BY 100 )

X% = 28.45