Question

On January 1, 2014, Gene Corp. paid $800,000 for 100,000 shares of Onofine Company's common stock, which represents 30% of Onofine ′s outstanding common stock. Onofine reported net income of $200,000 and paid cash dividends of $60,000 during 2014. Gene should report the investment in Onofine Company on its December 31, 2014, balance sheet at:

Answer 1

$842,000

Step-by-step explanation:

The computation of the investment amount is shown below:

= Paid amount + net income - cash dividend paid

where,

Paid amount is $800,000

Net income would be = $200,000 × 30% = $60,000

And, the dividend would be = $60,000 × 30% = $18,000

Now put these values to the above formula

So, the value would equal to

= $800,000 + $60,000 - $18,000

= $842,000

Since 30% represents the ownership, so we calculated the same