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Hat Inc.purchased 10,000 shares of Cat Co.'s common shares for $10 a share on January 1.During the year, Cat paid a $50,000 cash dividend and earned $300,000 net income.On December 31, the market value of Cat's stock was $8 a share.The investment is to be held as a long-term investment and the decline in value is not considered permanent.
-Assuming Hat owned 10 percent of Cat's outstanding voting shares; Hat would report the net carrying value of their investment account as:

Question

Use the following information for questions 
Hat Inc.purchased 10,000 shares of Cat Co.'s common shares for $10 a share on January 1.During the year, Cat paid a $50,000 cash dividend and earned $300,000 net income.On December 31, the market value of Cat's stock was $8 a share.The investment is to be held as a long-term investment and the decline in value is not considered permanent.
-Assuming Hat owned 10 percent of Cat's outstanding voting shares; Hat would report the net carrying value of their investment account as:

Quizplus · Accepted Answer

The net carrying value of the investment account is $80,000. This is calculated as the original cost of the investment ($100,000) minus the dividend income received ($50,000) plus the share of net income ($30,000) minus the unrealized loss on the investment ($20,000).

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