Apply the equity method of accounting to its investment

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Question - Suppose that Chuckie Cheese acquired 33.33% (one-third) of Toys R US from an unrelated third party for $80 million on October 1, 2012. At the acquisition date, the total book value of Toys R US's shareholders' equity was $240 million. Both have September 30 fiscal year ends. For the fiscal year ended September 30, 2013, Toys R US earned a total net income of $70 million and paid total dividends of $20 million. Under what conditions might Chuckie Cheese apply the equity method of accounting to its investment in Toys R US?

Reference no: EM133057936

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