Question

The summarized balance sheets of Goebel Company and Dobbs Company as of December 31, 2014 are as follows:

Goebel Company
Balance Sheet
December 31, 2014
Assets $1,200,000
Liabilities $ 150,000
Capital stock 600,000
Retained earnings 450,000
Total equities $1,200,000
Dobbs Company
Balance Sheet
December 31, 2014
Assets $900,000
Liabilities $205,000
Capital stock 575,000
Retained earnings 120,000
Total equities $900,000
If Goebel Company acquired a 20% interest in Dobbs Company on December 31, 2014 for $175,000 and the fair value method of accounting for the investment were used, the amount of the debit to Equity Investments (Dobbs) would have been:_________

Answer 1

$175,000

Step-by-step explanation:

Based on the information given we were told that in a situation where Goebel Company tend to acquired an interest of 20 percent in Dobbs Company on December 31, 2014 for the amount of $175,000 in which we were told that the fair value method of accounting were used for the Investment which means that the amount of DEBIT TO EQUITY INVESTMENT (Dobbs) would have been $175,000 which was the amount that was used by Goebel Company to acquired an interest of 20 percent in Dobbs Company on December 31,2014.