Reference no: EM133127565
Question - On January 1, 2020, Tamarisk Co. purchased 24,000 shares (a 10% interest) in Elton John Corp. for $1,470,000. At the time, the book value and the fair value of John's net assets were $14,200,000.
On July 1, 2021, Tamarisk paid $2,830,000 for 48,000 additional shares of John common stock, which represented a 20% investment in John. As a result of this transaction, Tamarisk 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.
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Net Income
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Dividend per Share
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Year ended 12/31/20
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$730,000
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None
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Six months ended 6/30/21
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510,000
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None
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Six months ended 12/31/21
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838,000
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$1.65
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Required - Determine the ending balance that Tamarisk Co. should report as its investment in John Corp. at the end of 2021.