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Nesterboy [21]
3 years ago
15

Frank Co. owns 30% of the voting common stock of Alex Services Inc. Frank uses the equity method to account for its investment.

On January 1, 2021, the balance in the investment account was $800,000. During 2021, Alex Services reported net income of $150,000 and paid dividends of $40,000. Any excess of fair value over book value is attributable to goodwill with an indefinite life. What is the balance in the investment account as of December 31, 2021
Business
1 answer:
QveST [7]3 years ago
3 0

Answer:

$833,000

Explanation:

Particulars                                                                         Amount

Investment account balance January 1, 2021                $800,000

Add: 30% of Alex Services Inc $150,000 net income   $45,000

Less: 30% of $40,000 dividends paid                            <u>$12,000   </u>

Investment account balance December 31, 2021       <u>$833,000</u>

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