On January 1, 2019, an entity acquired a 10% interest in an investee for 3,000,000. The investment was accounted for under the cost method. During 2019, the investee reported net income of 4,000,000 and paid dividend of 1,000,000. On January 1, 2020 the entity acquired aa further 15% interest in the investee for 8,500,000. On such date, the carrying amount of the net assets of the investee was 36,000,000 and the fair value of the 10% existing interest was 3,500,000. The fair value of the net assets of the investee is equal to carrying amount except for an equipment whose fair value was 4,000,000 greater than the carrying amount. The equipment had a remaining life of 5 years. The investee reported net income of 8,000,000 for 2020 and paid dividend of 6,000,000 om December 31, 2020. What amount of investment income should be recognized in 2019? *

On January 1, 2019, an entity acquired a 10% interest in an investee for 3,000,000. The investment was accounted for under the cost method. During 2019, the investee reported net income of 4,000,000 and paid dividend of 1,000,000. On January 1, 2020 the entity acquired aa further 15% interest in the investee for 8,500,000. On such date, the carrying amount of the net assets of the investee was 36,000,000 and the fair value of the 10% existing interest was 3,500,000. The fair value of the net assets of the investee is equal to carrying amount except for an equipment whose fair value was 4,000,000 greater than the carrying amount. The equipment had a remaining life of 5 years. The investee reported net income of 8,000,000 for 2020 and paid dividend of 6,000,000 om December 31, 2020. What amount of investment income should be recognized in 2019? *

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter13: Investments And Long-term Receivables

Section: Chapter Questions

Problem 8MC

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