On January 2, 20X0, Troquel Corporation bought 15% of Zafacon Corporation's capital stock for $30,000.  Troquel accounts for this investment by the cost method.  Zafacon's net income for the years ended December 31, 20X0, and December 31, 20X1, were $30,000 and $50,000 respectively.  During 20X1, Zafacon declared a dividend of $70,000.  No dividends were declared in 20X0.  How much should Troquel show on its 20X1 income statement as income from this investment?

On July 1, 20X2, Diamond, Inc., paid $1,000,000 for 100,000 shares (40%) of the outstanding common stock of Ashley Corporation.  At that date the net assets of Ashley totaled $2,500,000 and the fair values of all of Ashley's identifiable assets and liabilities were equal to their book values.  Ashley reported net income of $500,000 for the year ended December 31, 20X2, of which $300,000 was for the six months ended December 31, 20X2.  Ashley paid cash dividends of $250,000 on September 30, 20X2.  In its income staement for the year ended December 31, 20X2, what amount of income should Diamond report from its investment in Ashley?

On January 1, 20X3, Miller Company purchased 25% of Wall Corporation's common stock; no goodwill resulted from the purchase.  Miller appropriately carries this investment at equity and the balance in Miller's investment account was $190,000 at December 31, 20X3.  Wall reported net income of $120,000 for the year ended December 31, 20X3, and paid common stock dividends totaling $48,000 during 20X3.  How much did Miller pay for its 25% interest in Wall?

On January 3, 20X3, Mill, Inc., acquired 20% of the outstanding common stock of Nash Company for $700,000.  This investment gave Mill the ability to exercise significant influence over Nash. The book value of the acquired shares was $600,000.  The excess of cost over book value was attributed to an identifiable intangible asset which was undervalued on Nash's balance sheet and which had a remaining useful life of ten years.  For the year ended December 31, 20X3, Nash reported net income of $180,000 and paid cash dividends of $60,000 on its common stock.  At December 31, 20X3, the carrying value of Mill's investment in Nash should be

On January 2, 20X6, Saxe Company purchased 20% of Lex Corporation's common stock for $150,000.  This investment did not give Saxe the ability to exercise significant influence over Lex.  During 20X6 Lex reported net income of $175,000 and paid cash dividends of $100,000 on its common stock.  The balance in Saxe's investment in Lex Corporation accounts at December 31, 20X6, should be

Lee, Inc. acquired 30% of Polk Corp.'s voting stock on January l, 20X8 for $100,000.  During 20X8, Polk earned $40,000 and paid divideends of $25,000.  Lee's 30% interest in Polk gives Lee the ability to exercise significant influence over Polk's operating and financial policies. During 20X9, Polk earned $50,000 evenly over the year and paid dividends of $15,000 on April l and $15,000 on October l.  On July l, 20X9, Lee sold half of its stock in Polk for $66,000 cash.

The carrying amount of this investment in Lee's December 31, 20X8 balance sheet should be

What should be the gain on sale of this investment in Lee's 20X9 income statement?

On January 1, 20X5, Mega Corp. acquired 10% of the outstanding voting stock of Penny, Inc. On January 2, 20X6, Mega gained the ability to exercise significant influence over financial and operating control of Penny by acquiring an additional 20% of Penny's outstanding stock.  The two purchases were made at prices proportionate to the value assigned to Penny's net assets, which equaled their carrying amounts.  For the years ended December 31, 20X5 and 20X6, Penny reported the following:

                                                     20X5       20X6
Dividends paid                        $200,000    $300,000
Net income                               600,000      650,000

In 20X6, what amounts should Mega report as current year investment income and as an adjustment, before income taxes, to 20X5 investment income?

           20X6          Adjustment to
      investment     20X5 investment
       income                income

An investor uses the equity method to account for investments in common stock.  The purchase price implies a fair value of the investee's depreciable assets in excess of the investee's net asset carrying values.  The investor's amortization of the excess

Park Co. uses the equity method to account for its January 1, 20X0, purchase of Tun Inc.'s common stock.  On January 1, 20X0, the fair values of Tun's FIFO inventory and land exceeded their carrying amounts.  How do these excesses of fair values over carrying amounts affect Park's reported equity in Tun's 20X0 earnings?

     Inventory excess       Land excess