At the beginning of 2020, Fizzy Corporation and Healthy Beverages Company each invest $50,000,000 in a project to market ready-to-drink juices in Europe. Each has a 50% interest in this joint venture. During 2020, the joint venture reports income of $1,000,000 and pays dividends of $300,000 in cash. The joint venture's balance sheet at the end of 2020 looks like this:
$$\begin{array} { l r l r }
\text { Current assets } & \$ 500,000 & \text { Liabilities } & \$ 70,000,000 \
\text { Property and equipment } & \underline { 170,200,000 } & \text { Equity } & \underline { 100,700,000 } \
\text { Total } & \$ 170,700,000 & \text { Total } & \$ 170,700,000
\end{array}$$ At what amount will Fizzy report its investment in the joint venture on its balance sheet at the end of 2020?

Question

At the beginning of 2020, Fizzy Corporation and Healthy Beverages Company each invest $50,000,000 in a project to market ready-to-drink juices in Europe. Each has a 50% interest in this joint venture. During 2020, the joint venture reports income of $1,000,000 and pays dividends of $300,000 in cash. The joint venture's balance sheet at the end of 2020 looks like this:
$$\begin{array} { l r l r } 
\text { Current assets } & \$ 500,000 & \text { Liabilities } & \$ 70,000,000 \
\text { Property and equipment } & \underline { 170,200,000 } & \text { Equity } & \underline { 100,700,000 } \
\text { Total } & \$ 170,700,000 & \text { Total } & \$ 170,700,000
\end{array}$$ At what amount will Fizzy report its investment in the joint venture on its balance sheet at the end of 2020?

Quizplus · Accepted Answer

Fizzy Corporation's investment in the joint venture at the end of 2020 will be reported at $50,350,000. This is calculated by starting with the initial investment of $50,000,000, adding Fizzy's share of the joint venture's income ($1,000,000 * 50% = $500,000), and subtracting Fizzy's share of the dividends paid ($300,000 * 50% = $150,000). Therefore, $50,000,000 + $500,000 - $150,000 = $50,350,000.

At the Beginning of 2020, Fizzy Corporation and Healthy Beverages