Jansen Inc. acquired all of the outstanding common stock of Merriam Co. on January 1, 2019, for $257,000.Annual amortization of

Question

2 years ago

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Jansen Inc. acquired all of the outstanding common stock of Merriam Co. on January 1, 2019, for $257,000.Annual amortization of

$19,000 resulted from this acquisition.Jansen reported net income of $70,000 in 2019 and $50,000 in 2020 and paid $22,000 in dividends each year.Merriam reported net income of $40,000 in 2019 and $47,000 in 2020 and paid $10,000 in dividends each year.What is the Investment in Merriam Co. balance on Jansen's books as of December 31, 2020, if the equity method has been applied

Business

1 answer:

Semenov [28] · Answer 1 · 2022-06-02T19:33:04+03:00

Answer:

$286,000.

Explanation:

Calculation for the Investment in Merriam Co. balance on Jansen's books as of December 31, 2013, if the equity method has been applied

Using this formula

Investment balance=Common stock+ 2019 Reported net income+2020 Reported net income-Dividends-Annual amortization- Dividends-Annual amortization

Let plug the formula

Investment balance=$257,000 + $40,000 + $47,000 - $10,000 - $19,000 - $10,000 - $19,000

Investment balance= $286,000

Therefore the Investment in Merriam Co. balance on Jansen's books as of December 31, 2013, if the equity method has been applied will be $286,000