Problemon january 1 20x8 ramon corporation acquired 75, Ask an Expert

Accounting

Problem:

On January 1, 20X8, Ramon Corporation acquired 75 percent of Tester Company's voting common stock for $300,000. At the time of the combination, Tester reported common stock outstanding of $200,000 and retained earnings of $150,000, and the fair value of the noncontrolling interest was $100,000. The book value of Tester's net assets approximated market value except for patents that had a market value of $50,000 more than their book value. The patents had a remaining economic life of ten years at the date of the business combination. Tester reported net income of $40,000 and paid dividends of $10,000 during 20X8.

Required:

Question: What balance will Ramon report as its investment in Tester at December 31, 20X8, assuming Ramon uses the equity method in accounting for its investment?

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91165328

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