On January 1, 2013, Deuce Inc. acquired 15% of Wiz Co.'s outstanding common stock for $62,400 and categorized the investment as an available-for-sale security. Wiz earned net income of $96,000 in 2013 and paid dividends of $36,000. On January 1, 2014, Deuce bought an additional 10% of Wiz for $54,000. This second purchase gave Deuce the ability to significantly influence the decision making of Wiz. During 2014, Wiz earned $120,000 and paid $48,000 in dividends. As of December 31, 2014, Wiz reported a net book value of $468,000. For both purchases, Deuce concluded that Wiz Co.'s book values approximated fair values and attributed any excess cost to goodwill.
On Deuce's December 31, 2014 balance sheet, what balance was reported for the Investment in Wiz Co. account?

Question

Quizplus · Accepted Answer

2013 Purchase = $62,4002013 Income = ($96,000 × 15%) = $14,4002013 Dividend = ($36,000 × 15%) = $5,4002014 Purchase = $54,0002014 Income = ($120,000 × 25%) = $30,0002014 Dividend = ($48,000 × 25%) = $12,000Ending 2014 Balance = ($62,400 + $14,400 - $5,400 + $54,000 + $30,000 - $12,000) = $143,400