Assume that, on January 1, 2021, Carnival Corporation paid $2,320,000 for its investment in 33,000 shares of Sphinx Inc. Further, assume that Sphinx has 110,000 total shares of stock issued and estimates an eight-year remaining useful life and straight-line depreciation with no residual value for its depreciable assets. At January 1, 2021, the book value of Sphinx's identifiable net assets was $7,340,000, and the fair value of Sphinx was $10,000,000. The difference between Sphinx's fair value and the book value of its identifiable net assets is attributable to $1,850,000 of land and the remainder to depreciable assets. Goodwill was not part of this transaction. The following information pertains to Sphinx during 2021: Net Income $ 400,000 Dividends declared and paid $ 240,000 Market price of common stock on 12/31/2021 $ 80 /share What amount would Carnival Corporation report in its year-end 2021 balance sheet for its investment in Sphinx Inc.?

Assume that, on January 1, 2021, Carnival Corporation paid $2,320,000 for its investment in 33,000 shares of Sphinx Inc. Further, assume that Sphinx has 110,000 total shares of stock issued and estimates an eight-year remaining useful life and straight-line depreciation with no residual value for its depreciable assets. At January 1, 2021, the book value of Sphinx's identifiable net assets was $7,340,000, and the fair value of Sphinx was $10,000,000. The difference between Sphinx's fair value and the book value of its identifiable net assets is attributable to $1,850,000 of land and the remainder to depreciable assets. Goodwill was not part of this transaction. The following information pertains to Sphinx during 2021: Net Income $ 400,000 Dividends declared and paid $ 240,000 Market price of common stock on 12/31/2021 $ 80 /share What amount would Carnival Corporation report in its year-end 2021 balance sheet for its investment in Sphinx Inc.?

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter13: Investments And Long-term Receivables

Section: Chapter Questions

Problem 8MC

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