On January 4, 2013, Mason Co. purchased 40,000 shares (40%) of the common stock of Hefly Corp., paying $560,000. At that time, the book value and fair value of Hefly's net assets was $1,400,000. The investment gave Mason the ability to exercise significant influence over the operations of Hefly. During 2013, Hefly reported income of $150,000 and paid dividends of $40,000. On January 2, 2014, Mason sold 10,000 shares for $150,000.
What was the balance in the investment account before the shares were sold?

Question

Quizplus · Accepted Answer

$560,000 + ($150,000 × 40%) - ($40,000 × 40%) = $604,000