Are these the right assumptions in how to solve the question? Use the following

Question

Are these the right assumptions in how to solve the question?

Use the following to answer questions 36-37 The summarized balance sheets of Goebel Company and Dobbs Company as of December 31, 2014 are as follows: Goebel Company Balance Shect December 31, 2014 1.200000 Assets S 150,000 600,000 Liabilities Capial stock Retained earnings Total equities 120000 Dobbs Company Balance Sheet December 31, 2014 $200,000 $205,000 575,000 120,000 $900,000 Assets Liabilitics Capital stock Retained earnings Total equities 36. If Gocbel I Company acquired a 20% interest in Dobbs Company on December 31, 2014 for S175,000 and the fair value method of accounting for the investment were used, the amount of the debit to Equity Investments (Dobbs) would have been A) $139,000 B) S115,000. C $175,000 D) S180,000. 600,000-57S,000: 5175,000 Capiral StodCapital Stodkeor to of O Co Equity

Explanation / Answer

36.  ANSWER = C) $175000

Under Fair value method of accounting, investment will be recorded at Fair value of acquisation

37. ANSWER = B) $215000

The acquisation by Goebel compnay of dobbs, it records its investment under Investments in Associates/Affiliates, a long-term asset account. This transaction is recorded at cost

Accounting title Debit Credit Equity Investment (Dobbs) 175000 Cash 175000

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