On January 1, 2015, Como Company purchased 45% of the outstanding common shares of the Lite Company for $200,000. The net assets of Lite Company totaled $400,000. The inventory had a book value of $100,000 and a fair value of $120,000. Excess cost attributable to inventory is written off in 2015. During 2015, Lite Company earned $200,000 and declared a dividend of $40,000 for the year.
-The carrying value of the Lite investment at the end of 2015 is

Question

Quizplus · Accepted Answer

$263,000 = $200,000 (original cost)+ $90,000 (investment income: $200,000 × 45%)- $9,000 (write-off of inventory differential)- $18,000 (dividend declaration: $40,000 × 45%)

On January 1, 2015, Como Company Purchased 45% of the Outstanding