083Q8 - does not have significant influence over Joseph $...

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Cost and Equity Methods: [083Q8] Amy Company invested $2,400,000 when it bought 23,000 shares of Joseph Corporation on January 1, Year 1. Joseph’s financial statements on this date indicated owners’ equity of $3,000,000. Joseph’s income in Year 1 was $830,000 and dividends of $340,000 were declared and paid in Year 1. Joseph owns two assets for which the book values and the fair market values differ: Equipment and Buildings. The Equipment’s fair market value is $500,000 more than its book value. The Building’s book value is $1,000,000 less than the its fair market value. The Equipment has a remaining useful life of six years. The building’s remaining useful life is 14 years. For purposes of the next two requirements only, assume Amy owns 6% of Joseph and
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Unformatted text preview: does not have significant influence over Joseph. $_______ What is Amy’s Investment account balance at the end of Year 1? $_______ How much would Amy’s income increase in Year 1 as a direct result of this investment? For purposes of the next three requirements only, assume Amy owns 42% of Joseph and does have significant influence over Joseph. $_______ What is Amy’s Investment account balance at the end of Year 1? $_______ How much would Amy’s income increase in Year 1 as a direct result of this investment? $________ How much Goodwill, if any, is implicit in Amy’s Investment account on the date the investment is made?...
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