Business, 02.08.2019 21:20 hhaacahh612

Jansen inc. acquired all of the outstanding common stock of merriam co. on january 1, 2017, for $257,000. annual amortization of $19,000 resulted from this acquisition. jansen reported net income of $70,000 in 2017 and $50,000 in 2018 and paid $22,000 in dividends each year. merriam reported net income of $40,000 in 2017 and $47,000 in 2018 and paid $10,000 in dividends each year. what is the investment in merriam co. balance on jansen's books as of december 31, 2018, if the equity method has been applied?
a, $286,000
b, $296,000
c, $276,000
d, $344,000
e, $300,000

Answers: 3

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Answers

Answer from: 568389

A, $286,000

Explanation:

Whenever there is equity method followed, for accounting of subsidiary then entire income and dividends received are accounted for in the cost of investment.

Here cost = $257,000

Add: all the incomes of Merriam = $40,000 + $47,000 = $87,000

Less: Any dividends received = $10,000 + $10,000 = $20,000

Less: Amortization = $19,000 + $19,000 = $38,000

Therefore, total carrying value = $257,000 + $87,000 - $20,000 - $38,000

= $286,000

In equity method therefore, carrying value on December 31, 2018 = $286,000

Final Answer

A, $286,000

Answer from: krab38

As of December 31,2018 , the investment in Merriam co in books of Jansen's would be A) $286,000

Explanation:

It is told in the question that the equity method is to be applied , when taking out the amount of investment in Merriam co, so here all the income that Jansen will get from Merriam would be added and all the amortization expense and dividend declared by Merriam would be deducted fro taking out the total amount investment in Merriam.

INVESTMENT = Book value from acquiring common stock

Net income of year 2017

Dividend declared in 2017

Amortization expense of 2017

Net income of year 2018

Dividend declared in 2018

Amortization expenses of 2018

= $257,000 + $40,000 - $10,000 - $19,000 + $47,000 - $10,000 - $19,000

= $286,000

Answer from: Quest

The answer is passage 1.

Answer from: Quest

Iam pretty sure a because if u are exiting you need to know the exit plan

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Jansen inc. acquired all of the outstanding common stock of merriam co. on january 1, 2017, for $257...

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