on januayr 1, 2017, the leaf company acquired a 5% interest in the Trunk Corpora
ID: 2419372 • Letter: O
Question
on januayr 1, 2017, the leaf company acquired a 5% interest in the Trunk Corporation through the purchase of 100,000 shares of Trunk's Common stock for $640,000; the investment is recorded on Leaf's books as available for sale. During 2017, Trunk paid $40,000 in dividends and reported net income of $100,000. The market price of Trunk's common stock was $6.20 per share on Dec. 31, 2017. Leaf should report the investment in the Trunk Corporation on its Dec. 31, 2017, balance sheet as: A. 620,000 B. 627,000 C. 640,000 D. 645,000 Explain
Explanation / Answer
The investment is made for avilable for sale, so it is not investment, so we need to value based on market value at end of the finanacial year, so the value of investment is
A.$620,000
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