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ivanhoe Company owns 4200 of the 10000 outstanding shares of Tamarisk Corporation common stock. During 2021,...

ivanhoe Company owns 4200 of the 10000 outstanding shares of Tamarisk Corporation common stock. During 2021, Tamarisk earns $470000 and pays cash dividends of $152000.

If the beginning balance in the investment account was $920000, the balance at December 31, 2021 should be

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Answer #1
ivanhoe Company owns 4,200 of the 10,000 outstanding shares of Tamarisk Corporation.
Hence, % of common stock owned by ivanhoe Company = 4,200/10,000
= 42%
Revenue from investment inTamarisk Corporation = Net income of Tamarisk Corporation x Percentage of common stock required
=470000*42%
= $197,400
Share of dividend fromTamarisk Corporation = Dividend paid byTamarisk Corporation x Percentage of common stock required
=152,000 x 42%
= $63,840
Balance in investment at December 31 = Cost of 42% common stock acquired ofTamarisk Corporation + Revenue from investment in Tamarisk Corporation-Share of dividend from Tamarisk Corporation
= $920,000+197,400-63,840
= $10,53,560
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