Question

Bloomfield Bakers accounts for its investment in Clor Confectionary under the equity method. Bloomfield carried the Clor investment at $150,350 and $165,950 at December 31, 2020, and December 31, 2021, respectively. During 2021 Clor recognized $75,000 of net income and paid dividends of $20,050.
Required:
a) Assuming that Bloomfield owned the same percentage of Clor throughout 2021, its percentage ownership must have been _________.

Answer 1

Answer:

Assuming that Bloomfield owned the same percentage of Clor throughout 2021, its percentage ownership must have been 28,38%

Explanation:

In order to calculate its percentage ownership Assuming that Bloomfield owned the same percentage of Clor throughout 2021 we would have to calculate the following:

Assume percentage ownership = 'X'

then $150,350 + X%($75,000 - $20,050) = $165,950

= $150,350 + X%*54,950 = $165,950

X%*54,950 = $165,950 - $150,350

X% = 15,600 / 54,950

X% = 28.38%

Assuming that Bloomfield owned the same percentage of Clor throughout 2021, its percentage ownership must have been 28,38%