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P2-19 Fair Value Method [LO5] Gant Company purchased 20 percent of the outstanding shares of Temp Company for $70,000 on January 1, 20X6. The...

P2-19 Fair Value Method [LO5]

Gant Company purchased 20 percent of the outstanding shares of Temp Company for $70,000 on January 1, 20X6. The following results are reported for Temp Company:


20X6 20X7 20X8
Net income $ 40,000 $ 35,000 $ 60,000
Dividends paid 15,000 30,000 20,000
Fair value of shares held by Gant:
January 1 70,000 89,000 86,000
December 31 89,000 86,000 97,000

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Required:
Determine the amounts reported by Gant as income from its investment in Temp for each year and the balance in Gant’s investment in Temp at the end of each year assuming Gant uses the following methods in accounting for its investment in Temp (Omit the "$" sign in your response):


P2-19 Fair Value Method [LO5] Gant Company purchased 20 percent of the outstanding shares of Temp Company for $70,000 on January 1, 20X6. The following results are reported for Temp Company: 20X6 20X7 20X8 Net income $ 40,000 $ 35,000 $ 60,000 Divid ends paid 15,000 30,000 20,000 Fair value of shares held by Gant: Janu ary 1 70,000 89,000 86,000 Dec ember 31 89,000 86,000 97,000 Required: Determine the amounts reported by Gant as income from its investment in Temp for each year and the balance in Gant’s investment in Temp at the end of each year assuming Gant uses the following methods in accounting for its investment in Temp (Omit the "$" sign in your response) : a. Cost method. 20X6 20X7 20X8 Dividend income $ $ $ Balance in investment $ $ $ b. Equity method. 20X6 20X7 20X8 Income from investment $ $ $ Balance in investment $ $ $ c. Fair value method. 20X6 20X7 20X8 Income from investment $ $ $ Balance in investment $
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