Question

Rose Company owns 40% of Daisy Corporation’s voting stock. At the beginning of the year, Rose’s...

Rose Company owns 40% of Daisy Corporation’s voting stock. At the beginning of the year, Rose’s investment in Daisy had a book value of $120,000. This year, Daisy’s net income was $100,000 and paid dividends of 10,000. The fair value of Rose’s investment in Daisy was $150,000 at year end. What is the ending balance of the investment in Daisy on Rose’s books?

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Answer #1
Beginning Investment 120000
Add: Net income (40%) 40000    = 100000 x 40%
Less: Dividend paid (40%) 4000    = 10000 x 40%
Ending balance of investment 156000
Beginning Investment 120000
Add: Net income (40%) 40000    = 100000 x 40%
Less: Dividend paid (40%) 4000    = 10000 x 40%
Ending balance 156000
Beginning Investment 120000
Add: Net income (40%) 40000    = 100000 x 40%
Less: Dividend paid (40%) 4000    = 10000 x 40%
Ending balance 156000
Beginning Investment 120000
Add: Net income (40%) 40000    = 100000 x 40%
Less: Dividend paid (40%) 4000    = 10000 x 40%
Ending balance 156000
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