Fred owns 25% of Eaton and at January 1, 2013 has a balance in its investment ac

Question

Fred owns 25% of Eaton and at January 1, 2013 has a balance in its investment account of $40,000. In 2013 Eaton reports a net loss of $200,000. a. What is balance of Fred's Investment in Eaton at December 31, 2013 O b. How much will Eaton need to earn in 2014 before Fred can return to using the 5, equity method Regency owns 5% of Marriott. On October 1, 2012 Regency acquires an additional 25% of Marriott bringing its ownership percentage up to 30%. From January 1 - September 30, 2012 Marriott earns $100,000. From October 1, December 31 2012 Marriott earns $40,000. What is the total income reported by Regency in 2012. 6.

Explanation / Answer

Answer:

a Opening balance= $40000

Add/Less: Share of fred in loss of eaton ie.$200000*25%=$(50000)

Ending investment as on december2013= $-10000

(b) $50000

6)Ans

$100000*5%=$5000 till september 2012

$40000*30%=$12000

Total income reported= $5000+$12000=$17000

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