Use the following information for questions 115 through 117.
Rich, Inc. acquired 30% of Doane Corporation's voting stock on January 1, 2014 for $800,000. During 2014, Doane earned $320,000 and paid dividends of $200,000. Rich's 30% interest in Doane gives Rich the ability to exercise significant influence over Doane's operating and financial policies. During 2015, Doane earned $400,000 and paid dividends of $120,000 on April 1 and $120,000 on October 1. On July 1, 2015, Rich sold half of its stock in Doane for $528,000 cash.
-The carrying amount of this investment in Rich's December 31, 2014 balance sheet should be

Question

Quizplus · Accepted Answer

The carrying amount of the investment in Doane Corporation will increase by Rich's share of Doane's earnings for the year ($320,000 × 30%), or $96,000, and decrease by Rich's share of Doane's dividends for the year ($200,000 × 30%), or $60,000, to a carrying amount of $836,000.

Use the Following Information for Questions 115 Through 117