Question

On January 1, 2018, Nana Company paid $100,000 for 6,900 shares of Papa Company common stock. The ownership in Papa Company is 10%. Nana Company does not have significant influence over Papa Company. Papa reported net income of $64,000 for the year ended December 31, 2018. The fair value of the Papa stock on that date was $65 per share. What amount will be reported in the balance sheet of Nana Company for the investment in Papa at December 31, 2018?

a. $373,500.
b. $388,500.
c. $403,500.
d. $448,500.

Answer 1

d. $448,500

Step-by-step explanation:

Nana Company paid $100,000 for 6,900 shares

= $100,000/6,900

=$14.49 per share

Nana Company Balance sheet as at December 31, 2018

investment in Papa Company

= 6,900 shares * $65

= $448,500