Crane Company purchases an investment in Windall Company at the purchase price of $3.3 million cash. This represents 25% of the book value of Windall. During the year, Windall reports net income of $300,000 and pays cash dividends of $50,000. At the end of the year, the market value of Crane's investment is $3.2 million.
Required
a. At what amount is the investment reported on Crane's balance sheet at year-end?
b. What amount of income from investments does Crane report? Explain.
c. How are dividends treated in equity method accounting?

Question

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The Answer of Crane Company purchases an investment in Windall Company at the purchase price of $3.3 million cash. This represents 25% of the book value of Windall. During the year, Windall reports net income of $300,000 and pays cash dividends of $50,000. At the end of the year, the market value of Crane's investment is $3.2 million.
Required
a. At what amount is the investment reported on Crane's balance sheet at year-end?
b. What amount of income from investments does Crane report? Explain.
c. How are dividends treated in equity method accounting?

Crane Company Purchases an Investment in Windall Company at the Purchase