Jackson Corporation owns 10% of the voting stock of Kettering Company and has been reporting it as an equity investment with no
significant influence. At the beginning of the current year, the investment has a fair value of $40,000,000. Jackson originally purchased its 10% interest for $30,000,000. Jackson purchases an additional 25% interest in Kettering's voting stock for $120,000,000, and determines that the equity method is now appropriate. Any basis difference is attributed to goodwill. Kettering reports net income of $800,000 for the current year, and declares and pays $100,000 in dividends. The year-end fair value of Jackson's 35% interest is $170,000,000. At what amount does Jackson report the investment on its balance sheet? A. $160,245,000 B. $160,280,000 C. $170,000,000 D. $150,245,000
Financial markets give careful consideration to changes in the government reserve's rate in light of the fact that these progressions .show the Fed's arrangements for money related strategy. Financial markets is a market in which individuals exchange monetary securities, products, and other fungible things of significant worth at low exchange costs and at costs that reflect free market activity.
In this question, we are asked to calculate the Value of the cash return on asset
We use a mathematical representation to do this. Let’s get the formula.
Mathematically:
Cash return on assets = operating cash flows/average total assets
According to the question, the operating cash flow has a value of $150,000. The average total assists have a value of (350,000+450,000)/2 = 800,000/2 = $400,000
