Advanced Accounting Assignment
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During January 2012, Wells, Inc. acquired 30%
of the outstanding common stock of Wilton
Co. for $1,400,000. This investment gave Wells the ability to exercise
significant influence over Wilton.
Wilton’s assets on that date were recorded at $6,400,000 with liabilities of $3,000,000. Any excess of cost over
book value of Wells’ investment was attributed
to unrecorded patents having a remaining useful life of ten years. In 2012, Wilton reported net income of $600,000. For
2013, Wilton reported net income
of $750,000. Dividends of $200,000 were paid in each of these two years. What was
the reported balance of Wells’ Investment in Wilson Co. at December 31, 2013?
a)
1,485,000
b)
1,685,000
c)
1,647,000
d)
1,054,300
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