On January 1, 2021, Anderson Company purchased 40% of the voting common stock of Barney Company for $2,000,000, which approximated book value. During 2021, Barney paid dividends of $30,000 and reported a net loss of $70,000.What is the balance in the investment account on December 31, 2021?

Question

Quizplus · Accepted Answer

The investment account is adjusted for Anderson's share of Barney's net loss and dividends. Anderson's share of the net loss is 40% of $70,000, which is $28,000. Anderson's share of the dividends is 40% of $30,000, which is $12,000. The investment account is reduced by both amounts: $2,000,000 - $28,000 - $12,000 = $1,960,000.

On January 1, 2021, Anderson Company Purchased 40% of the Voting