Answer:
$230,000
Explanation:
Calculation to determine What amount should Pare report in its December 31, Year 1, Balance Sheet as investment in Tot
Based on the information given the 10% ownership percentage will be used in Year 1 reason been that the additional 20% purchased in 12/31/Year 1, hence In Year 2, 30% earnings would be recorded in the investment account
Investment account at 12/31/Year 1 =[(Actual ownership percentage*Outstanding shares of common stock 1/2/Year 1)+ 1/2/Year 1 Common stock value ] +(Additional ownership percentage*Outstanding shares of common stock 12/31/Year 1 )+ 12/31/Year 1 Additional shares value]
Let plug in the formula
Investment account at 12/31/Year 1 =
[(100,000*10%)+$50,000]+[(100,000*20%)+$150,000
Investment account at 12/31/Year 1 =($10,000+$50,000)+($20,000+$150,000)
Investment account at 12/31/Year 1 =$60,000+$170,000
Investment account at 12/31/Year 1 =$230,000
Therefore The amount that Pare should report in its December 31, Year 1, Balance Sheet as investment in Tot is $230,000
