Alcor and Vax Inc, both Canadian private companies, formed a joint venture on January 1, 2013 called Inventure Inc. Alcor and Vax each hold a 50% in the venture and share equally in any profits or losses arising from the venture. The following statements were prepared on December 31, 2013. Other Information: During 2013, Inventure purchased $10,000 from Alcor. Alcor recorded a gross profit of $2,000 on these sales. On December 31, 2013, Inventure's inventories contained half of the merchandise purchased from Alcor. Alcor uses the cost method to account for its Investment in Inventure and has elected to report its investment using proportionate consolidation. An income tax allocation rate of 20% applies. Prepare Alcor's Balance Sheet as at December 31, 2013, if Alcor elected to report its investment in Inventure using the equity method.

Question

Alcor and Vax Inc, both Canadian private companies, formed a joint venture on January 1, 2013 called Inventure Inc. Alcor and Vax each hold a 50% in the venture and share equally in any profits or losses arising from the venture. The following statements were prepared on December 31, 2013.  Other Information: During 2013, Inventure purchased $10,000 from Alcor. Alcor recorded a gross profit of $2,000 on these sales. On December 31, 2013, Inventure's inventories contained half of the merchandise purchased from Alcor. Alcor uses the cost method to account for its Investment in Inventure and has elected to report its investment using proportionate consolidation. An income tax allocation rate of 20% applies. Prepare Alcor's Balance Sheet as at December 31, 2013, if Alcor elected to report its investment in Inventure using the equity method.

Quizplus · Accepted Answer

The Answer of Alcor and Vax Inc, both Canadian private companies, formed a joint venture on January 1, 2013 called Inventure Inc. Alcor and Vax each hold a 50% in the venture and share equally in any profits or losses arising from the venture. The following statements were prepared on December 31, 2013.  Other Information: During 2013, Inventure purchased $10,000 from Alcor. Alcor recorded a gross profit of $2,000 on these sales. On December 31, 2013, Inventure's inventories contained half of the merchandise purchased from Alcor. Alcor uses the cost method to account for its Investment in Inventure and has elected to report its investment using proportionate consolidation. An income tax allocation rate of 20% applies. Prepare Alcor's Balance Sheet as at December 31, 2013, if Alcor elected to report its investment in Inventure using the equity method.

Alcor and Vax Inc, Both Canadian Private Companies, Formed a Joint