On January 1,2016,American Corporation purchased 25% of the outstanding voting shares of Short Supplies common stock for $210,000 cash.On that date,Short's book value and fair value were both $840,000.The equity method is deemed appropriate for this investment.Short's net income reported on December 31,2016,was $80,000.During 2016,Short also paid cash dividends in the amount of $24,000.
Required:
Compute the amount that would be reported for the investment on American Corporation's financial statements at December 31,2016.

Question

Quizplus · Accepted Answer

The Answer of On January 1,2016,American Corporation purchased 25% of the outstanding voting shares of Short Supplies common stock for $210,000 cash.On that date,Short's book value and fair value were both $840,000.The equity method is deemed appropriate for this investment.Short's net income reported on December 31,2016,was $80,000.During 2016,Short also paid cash dividends in the amount of $24,000.
Required:
Compute the amount that would be reported for the investment on American Corporation's financial statements at December 31,2016.

On January 1,2016,American Corporation Purchased 25% of the Outstanding Voting