52965632:ACC/423 / Bb Week 5 Assignment [ade Mon
*Exercise 22-22
On January 1, 2017, Ivanhoe Co. purchased 24,000 shares (a 10% interest) in Elton John Corp. for $1,360,000. At the
time, the book value and the fair value of John's net assets were $13,400,000.
On July 1, 2018, Ivanhoe paid $3,350,000 for 48,000 additional shares of John common stock, which represented a
20% investment in John. The fair value of John's identifiable assets net of liabilities was equal to their carrying amount
of $14,500,000. As a result of this transaction, Ivanhoe owns 30% of John and can exercise significant influence over
John's operating and financial policies. (Any excess fair value is attributed to goodwill.)
John reported the following net income and declared and paid the following dividends.
Year ended 12/31/17
Six months ended 6/30/18
Six months ended 12/31/18
Net Income
Dividend per Share
$670,000
None
480,000
None
745,000
$1.65
Determine the ending balance that Ivanhoe Co. should report as its investment in John Corp. at the end of 2018.
Investment in Elton John Corp.
$
Question Attempts: 0 of 3 used
