Parent uses the cost method. The following balances are known: 1/1/x1 Investment in Sub $8 1/1/x1...

Parent uses the cost method. The following balances are known:

1/1/x1 Investment in Sub $8

1/1/x1 Retained Earnings (Parent) $400

1/1/x1 Retained Earnings (Sub) $180

x1 Sub's Earnings $115

x1 Sub's Dividends Declared and Paid $61

What is the balance in "Investment in Sub" under cost on 12/31/x1?

What would be the balance in "Investment in Sub" on 1/1/x1 in Parent used the equity method?

What would be the balance in "Investment in Sub" on 12/31/x1 in Parent used the equity method?

Solutions

Expert Solution

a)
1/1/x1 Investment in Sub	$ 8.00
Investment in Sub under cost on 12/31/x1	$ 8.00

b)
Investment in Sub on 1/1/x1 in Parent used the equity method	$ 8.00

c)
1/1/x1 Investment in Sub	$ 8.00
x1 Sub's Earnings	$ 115.00
x1 Sub's Dividends Declared and Paid	$ (61.00)
Investment in Sub underequityon 12/31/x1	$ 62.00

ekkarill92 answered 2 years ago

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