On january 1 2014 farming associates purchased 25 of the, Ask an Expert

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On January 1, 2014, Farming Associates purchased 25% of the outstanding shares of stock of Anders Corp for $125k cash. The investment will be accounted for by the equity method. On that date, Anders's net assets (book and fair value) were $250k. Farming has determined that the excess of the cost of its investment in Anders over its share of Anders's net assets is attributable to equipment whose market value exceeds its carrying value by $95k and to an operating license whose market value exceeds its carryiing value by $95k. The remaining useful life of the equipment is 10 years and the remaining useful life of the operating license is 20 years.

Anders's net income for the year ended Dec. 31, 2014, was $55k. During 2014, Farming received $4,500 cash dividends from Anders. There were no ther transactions between the two companies.

Computer the amount that would be reported on Farming Associates' books for the investment in Anders Corp. at Dec. 31, 2014.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9801256

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