Park Company acquired a 90% interest in Southwestern Company on December 31, 2013, for $320,000.During 2014 Southwestern had a net income of $22,000 and paid a cash dividend of $7,000.Applying the cost method would give a debit balance in the Investment in Stock of Southwestern Company account at the end of 2014 of:

Question

Quizplus · Accepted Answer

Under the cost method, the investment account remains at the acquisition cost, which is $320,000, regardless of the subsidiary's net income or dividends.

Park Company Acquired a 90% Interest in Southwestern Company on December