Question

On January 1, 2021, Nana Company paid $100,000 for 8,000 shares of Papa Company common stock, which represents 10% ownership. Papa reported net income of $52,000 for the year ended December 31, 2021. The fair value of the Papa stock on that date was $45 per share. What amount will be reported in the balance sheet of Nana Company for the investment in Papa at December 31, 2021

Answer 1

$360,000

Step-by-step explanation:

According to the scenario, computation of given data are as follows,

Nana company bought shares = 8,000

Fair value of share = $45 per share

So, we can calculate the amount to be reported in balance sheet by using following formula,

Amount to be reported in balance sheet = Number of shares bought × Fair value per share

= 8,000 × $45

= $360,000