Calculate the balance in the investment account at september

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Reference no: EM132719492

On January 1st.2019, X Company purchased 400,000(80%) of the outstanding common shares of Y Company for $500,000. At that date, Y Company's book value comprised common shares of $25,000 and retained earnings of $300,000. Also at that date, equipment on Y's books was undervalued by $60,000 and had a remaining useful life of 4 years. The balance of the purchase price discrepancy, if any, related to goodwill. On October 31st. 2019, X sold 100,000 of its common share holdings of Y to an unrelated company for $150,000. During 2019, Y had net income of $120,000 earned evenly through the year and paid dividends of $50,000 in the year.

Required:-

Problem a. Calculate the balance in the Investment Account at September 30th.,2019, if X was reporting the investment using the equity method

Problem b. What is the balance in the Investment Account at September 3th,2019, if X was reporting the investment using the cost method

Problem c. What is the amount of gain or loss arising from X's disposal in Y's common shares on October 31st.2019<(X recording using the equity method)

Reference no: EM132719492

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