Reference no: EM132990169

Gant Company purchased 20 percent of the outstanding shares of Temp Company for $76,000 on January 1, 20X6. The following results are reported for Temp Company:

                                       20X6                     20X7                   20X8

Net income                        $41,000              $36,000            $54,000

Dividends paid                       13,000              28,000            18,000

Fair value of shares held by Gant:

January 1                               76,000                 95,000              92,000

December 31                            95,000                   92,000               103,000

Required:

Problem 1: Determine the amounts reported by Gant as income from its investment in Temp for each year and the balance in Gant's investment in Temp at the end of each year assuming that Gant uses the following options in accounting for its investment in Temp:

• Carries the investment at fair value.
• Uses the equity method.