Evan Company reports net income of 153000 eath year and decl

Evan Company reports net income of $153,000 eath year and declares an annual cash dividend of $80000. The company holds net assets of $2110000 on January 1, 2017. On that dete, Shaina purchases 40 percent of Evans outstanding common stock for $1,05100o vhich gives it the ability to significently influence Evan. At the purchase date, the excess of Shalina\'s cost over its proportionate shere of Evan\'s book velue was assigned to goodwill. On December 31 2019, whet is the Investment in Evan Company balance (equity method n Shaline\'s financial records? ·2019, what 17 oints Muitiple Choice $1173,400.

Solution

Net assets of EVAN company 2110000 Percentage of common stock acquired 40% Share of net assets (2,110,000*40%) 844000 40% of common stock acquired for 1051000 Consideration paid in excess of net asset and will be termed as goodwill (1,051,000 - 844,000) 207000 40% of common stock acquired for 1051000 Add: 2017 Share of Net Income (153000*40%) 61200 Less: 2017 Share of Dividends (60000*40%) -24000 Add: 2018 Share of Net Income (153000*40%) 61200 Less: 2018 Share of Dividends (60000*40%) -24000 Add: 2019 Share of Net Income (153000*40%) 61200 Less: 2019 Share of Dividends (60000*40%) -24000 Value of investment in Evan Company in shaina\'s financial records 1162600 Therefore, the right answer is option (a)