On January 1, 2015, Ramsey Company purchased 35% of the outstanding common shares of the Vapor Company for $70,000 when the net assets were $200,000. During 2015, Vapor Company earned $80,000 and declared a dividend of $40,000. Ramsey accounted for the investment using the equity method.
-What is the balance in the investment account as of December 31,2015?

Question

Quizplus · Accepted Answer

$70,000 (original cost)+ $28,000 (investment income: $80,000 × 35%)- $14,000 (dividend declaration: $40,000 × 35%)

On January 1, 2015, Ramsey Company Purchased 35% of the Outstanding