Assume that, on January 1, 2021, Matsui Co. paid $2,529,600 for its investment in 105,400 shares...

Assume that, on January 1, 2021, Matsui Co. paid $2,529,600 for its investment in 105,400 shares of Yankee Inc. Further, assume that Yankee has 310,000 total shares of stock issued. The book value and fair value of Yankee's identifiable net assets were both $620,000 at January 1, 2021. The following information pertains to Yankee during 2021:


Net income	$	310,000
Dividends declared and paid	$	93,000
Market price of common stock on 12/31/2021	$	26	/share

What amount would Matsui report in its year-end 2021 balance sheet for its investment in Yankee?

Expert Solution

Answer

% of holding = 105,400 /310,000 = .3 or 34%

Investment value = cost +share in net income - dividend share

2529600 + (310000*.34) -(93000 *.34)

2529600 + 105400 - 31620

$ 2,603,380

ekkarill92 answered 2 years ago

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