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What amount should Owl report as investment in Fox

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Question - On January 2, Year 1, Owl Co. purchased 30% of the common stock in Fox Co. for $500,000. On this date, Fox's stockholders' equity was $1,000,000. The carrying amounts of Fox's identifiable net assets approximated their fair values. At December 31, Year 1, Fox's stock had a fair value of $540,000, Fox reported net income of $240,000 and declared dividends of $40,000. By all indications, Owl appears to have significant influence over Fox. In its December 31, Year 1, balance sheet, what amount should Owl report as investment in Fox?

a. $575,000

b. $440,000

c. $540,000

d. $560,000

Reference no: EM132710556

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