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Ajax Beverages holds 40% of the stock of Bubbly Bottler, acquired at a cost equal to 40% of Bubbly's book value at the time of purchase. This is a significant influence investment. At the start of 2021, Ajax reports the investment at a balance of $100,000. In 2021, Bubbly reports net income of $1,000 and $50 in other comprehensive income. Bubbly pays no dividends in 2021. The market value of Ajax's investment in Bubbly stock increases by $500 during 2021.


At what amount does Ajax report the investment at the end of 2021?

a. $100,500
b. $100,420
c. $100,400
d. $100,450

Respuesta :

Tundexi

Answer:

b. $100,420

Explanation:

Amount paid for investment                              $100,000

Add: Share of net income                                  $400

($1000*40%)

Add: Share of other comprehensive income    $20        

($50*40%)

Investment at the end of 2021                          $100,420

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