Use the following information for questions 99 through 102.
The summarized balance sheets of Goebel Company and Dobbs Company as of December 31, 2014 are as follows:
-If Goebel Company acquired a 20% interest in Dobbs Company on December 31, 2014 for $145,000 and during 2015 Dobbs Company had net income of $75,000 and paid a cash dividend of $30,000, applying the fair value method would give a debit balance in the Equity Investments (Dobbs) account at the end of 2015 of

Question

Use the following information for questions 99 through 102.
The summarized balance sheets of Goebel Company and Dobbs Company as of December 31, 2014 are as follows: 
-If Goebel Company acquired a 20% interest in Dobbs Company on December 31, 2014 for $145,000 and during 2015 Dobbs Company had net income of $75,000 and paid a cash dividend of $30,000, applying the fair value method would give a debit balance in the Equity Investments (Dobbs) account at the end of 2015 of

Quizplus · Accepted Answer

Under the fair value method, the investment is initially recorded at cost, which is $145,000. Changes in the fair value of the investment are recognized in the income statement, but dividends received are not added to the investment account. Therefore, the balance remains at $145,000.

Use the Following Information for Questions 99 Through 102