Grant, Inc. acquired 40% of South Company\'s common stock for $200,000 on Januar
ID: 2445641 • Letter: G
Question
Grant, Inc. acquired 40% of South Company's common stock for $200,000 on January 1, 2014. In its 2014 cash flow statement, Grant, Inc. reported an operating cash inflow related to its investment in South Company of $6,800. The balance in the investment in South Company account at December 31, 2014 amounted to $226,800. During 2015, South Company reported net income of $91,000. On December 31, 2015, Grant, Inc. sold one-half of its investment in South Company for $137,000 cash which resulted in them reporting a gain on sale of investments of $12,000. Calculate the balance in South Company Account at December 31, 2015 immediately before one-half of the investment was sold.
Explanation / Answer
Net income reported by South Company in 2014 = 6,800 / 0.4 = $ 17,000
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