on january 1,2005, coot company acquired a 155 INTEREST IN ROOST CORPORATION for
ID: 2434755 • Letter: O
Question
on january 1,2005, coot company acquired a 155 INTEREST IN ROOST CORPORATION for 120,000 when roost's stockholder's equity consisted of 600,000 capital stock and 200,000 retained earnings. book values of roost's net assets equaled their value on this date. roost's net income and dividends for 2005 through 2007 are as follows:2005 2006 2007
net income 12,000 15,000 25,000
dividends paid 10,000 10,000 10,000
assume that coot has significant influence and uses the equity method of accounting for its investment in roost. the balance in the investment in roost account at december 31,2007 will be:
a. 118,000
b. 120,000
c. 121,800
d. 123,300.
Explanation / Answer
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