Petunia 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,Petunia sold 3,000 shares of Spring's $5 par value shares for $90,000 in cash.Petunia 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 Petunia on January 1,20X4,before its sale of shares?

Question

Petunia 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,Petunia sold 3,000 shares of Spring's $5 par value shares for $90,000 in cash.Petunia 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 Petunia on January 1,20X4,before its sale of shares?

Quizplus · Accepted Answer

The Answer of Petunia 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,Petunia sold 3,000 shares of Spring's $5 par value shares for $90,000 in cash.Petunia 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 Petunia on January 1,20X4,before its sale of shares?

Petunia Corporation Acquired 90 Percent of the Stock of Spring