Station Land Manufacturing acquired a 30% interest in the outstanding stock of Performer Fiberglass Industries on December 31, 2018. The purchase price was $3,100,000 and amounted to 100,000 shares. During 2019, Performer Industries paid just one dividend on June 30th of $1.65 per share. For yearend December 31, 2019, Performer Industries reported net income of $2,780,600. Its stock price on December 31, 2019 was $38 per share.
c. Under each of the methods used to account for the investment in Performer Industries, what would be the amount reported on Station Land’s Balance Sheet related to the investment at December 31, 2019? In addition, what would be the total income reported on their Income Statement for the year ended 2019?
Balance Sheet: Amount to be Reported
a. “Cannot” Exercise Significant Control
b. “Can” Exercise Significant Control
Income Statement:
Total Income to be Reported
a. “Cannot” Exercise Significant Control
b. “Can” Exercise Significant Control
Station Land Manufacturing acquired a 30% interest in the outstanding stock of Performer Fiberglass Industries on December 31, 2018. The purchase price was $3,100,000 and amounted to 100,000 shares. During 2019, Performer Industries paid just one dividend on June 30th of $1.65 per share. For yearend December 31, 2019, Performer Industries reported net income of $2,780,600. Its stock price on December 31, 2019 was $38 per share.
c. Under each of the methods used to account for the investment in Performer Industries, what would be the amount reported on Station Land’s Balance Sheet related to the investment at December 31, 2019? In addition, what would be the total income reported on their Income Statement for the year ended 2019?
Balance Sheet: Amount to be Reported
a. “Cannot” Exercise Significant Control
b. “Can” Exercise Significant Control
Income Statement:
Total Income to be Reported
a. “Cannot” Exercise Significant Control
b. “Can” Exercise Significant Control