What the Investment account on December

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Question - Blanco Company purchased 200 of the 1,000 outstanding shares of Darby Company's common stock for $600,000 on January 2, 2016. During 2016, Darby Company declared dividends of $100,000 and reported earnings for the year of $400,000.

1. If Blanco Company used the fair value method of accounting for its 20% investment in Darby Company, and its fair value at 12/31/16 is $680,000, the Investment (Darby) account on December 31, 2016 should be

a. $580,000.

b. $660,000.

c. $600,000.

d. $680,000.

2. If Blanco Company uses the equity method of accounting for its 20% investment in Darby Company, its Equity Investment (Darby) account at December 31, 2016 should be

a. $580,000.

b. $600,000.

c. $660,000.

d. $680,000.

Reference no: EM132926588

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