On January 1, 2011, Bangle Company purchased 30% of the voting common stock of Sleat Corp. for $1,000,000. Any excess of cost over book value was assigned to goodwill. During 2011, Sleat paid dividends of $24,000 and reported a net loss of $140,000. What is the balance in the investment account on December 31, 2011?

Question

Quizplus · Accepted Answer

The investment account balance is the initial cost plus the share of net income or minus the share of net loss. The share of net loss is 30% x $140,000 = $42,000. The investment account balance is $1,000,000 - $42,000 = $958,000.

On January 1, 2011, Bangle Company Purchased 30% of the Voting