On January 1, 2016, Green Corporation purchased 2 of the outstanding voting comm

ID: 2492631 • Letter: O

Question

On January 1, 2016, Green Corporation purchased 2 of the outstanding voting common stock of Gold Company The book value of the acquired shares was The excess of cost over book life of attributable to an asset on Gold's books that was undervalued and had a remaining useful five years. For the year ended December 31, 2016. Gold reported net income of$126,ooo and paid cash dividends of $25,900. the carrying value of Green's investment in Gold at December 31. 2016? O $326426. O $300,400. O $321.526. O $293,666.

Explanation / Answer

Book value of acquired shares = $275,900

Consideration paid for acquisition = $300,400

Value of intangible asset = $300,000 - $275,900 = $24,500

Remaining life of intangible asset = 5 years

Amortisation of Intangible asset for the year 2016 = $24,500/5 = $4,900

Investment in Gold company; January 1, 2016

$ 300,400.00

Less: Amortisation of Intangible assets

-$ 4,900.00

Add: Share in net income of Gold company

$126,000 * 26%

$ 32,760.00

Less: Share in cash dividend paid

$25,900 * 0.26

-$ 6,734.00

Investment in Gold company; December 31, 2016

$ 321,526.00

Hence, Answer is $321,526