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Vaughn Inc. acquired all of the outstanding common stock of Roberts Co. on January 1, 2020,...

Vaughn Inc. acquired all of the outstanding common stock of Roberts Co. on January 1, 2020, for $276,000. Annual amortization of $21,000 resulted from this acquisition. Vaughn reported net income of $80,000 in 2020 and $60,000 in 2021 and paid $24,000 in dividends each year. Roberts reported net income of $50,000 in 2020 and $57,000 in 2021 and paid $12,000 in dividends each year. What is the Investment in Roberts Co. balance on Vaughn's books as of December 31, 2021, if the equity method has been applied?

Multiple Choice

  • $368,000.

  • $341,000.

  • $383,000.

  • $317,000.

  • $326,000.

Business   Accounting   
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Answer #1
Amount paid for acquisition 276000
Add: Share of net income for 2020 50000
Less: Dividends received in 2020 -12000
Less: Annual amortization -21000
Investment in Roberts Co. balance December 31, 2020 293000
Investment in Roberts Co. balance December 31, 2020 293000
Add: Share of net income for 2021 57000
Less: Dividends received in 2021 -12000
Less: Annual amortization -21000
Investment in Roberts Co. balance December 31, 2021 317000
$317,000 is correct option
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