Autumn Corporation acquired 90 percent of the stock of Spring Company on January 1, 20X2, for $360,000. At that date, the fair value of the noncontrolling interest was $40,000. Spring's balance sheet contained the following amounts at the time of the combination:
During each of the next three years, Spring reported net income of $70,000 and paid dividends of $20,000. On January 1, 20X4, Autumn sold 3,000 shares of Spring's $5 par value shares for $90,000 in cash. Autumn used the fully adjusted equity method in accounting for its ownership of Spring Company.
-Based on the preceding information,what was the balance in the investment account reported by Autumn on January 1,20X4,before its sale of shares?

Question

Autumn Corporation acquired 90 percent of the stock of Spring Company on January 1, 20X2, for $360,000. At that date, the fair value of the noncontrolling interest was $40,000. Spring's balance sheet contained the following amounts at the time of the combination:
  During each of the next three years, Spring reported net income of $70,000 and paid dividends of $20,000. On January 1, 20X4, Autumn sold 3,000 shares of Spring's $5 par value shares for $90,000 in cash. Autumn used the fully adjusted equity method in accounting for its ownership of Spring Company.
-Based on the preceding information,what was the balance in the investment account reported by Autumn on January 1,20X4,before its sale of shares?

Quizplus · Accepted Answer

The balance in the investment account before the sale of shares was reported as $450,000.

Autumn Corporation Acquired 90 Percent of the Stock of Spring