22. Assume that, on January 1,2016, Matsul Co. pald $957600 for its Investment i

Question

22. Assume that, on January 1,2016, Matsul Co. pald $957600 for its Investment in 53,200 shares of Yankee Inc.. Further, assume that Yankee has 190,000 total shares of stock Issued. The book value and fair value of Yonkees ldentflable net assets were both $380,000 at January 1,2016. The following Iinformation pertains to during 2016 $190,000 $57000 Net Income What amount would Matsul report in its year-end 2016 balance sheet for its investment in Yankee? O None of these answer choices is correct O $1014,600. O $994,840. O $1,204,600 MacBook Air esc FI F2 F3 FS 4

Explanation / Answer

Matusi Co. paid $957,600 for its investment in 53,200 shares of Yankee Inc.
Total Number of shares outstanding = 190,000

Matusi Co. acquired 28% (53,200 / 190,000) shares outstanding.

Net Income = $190,000
Dividend paid = $57,000

Investment in Yankee = $957,600 + 28% of Net Income - 28% of Dividend
Investment in Yankee = $957,600 + 28% * $190,000 - 28% * $57,000
Investment in Yankee = $994,840

So, Matosi will report an investment of $994,840 in Yankee Inc.

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