Compute the amount that would be reported for the investment

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On January 1, 2021, American Corporation purchased 25% of the outstanding voting shares of Short Supplies common stock for $232,500 cash. On that date, Short's book value and fair value were both $930,000. The equity method is deemed appropriate for this investment. Short's net income reported on December 31, 2021, was $89,000. During 2021, Short also paid cash dividends in the amount of $28,500.

Required:

Problem 1: Compute the amount that would be reported for the investment on American Corporation's financial statements at December 31, 2021.

Reference no: EM132838649

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