Gant Company purchased 20 percent of the outstanding shares *

| June 3, 2016

Question
Gant Company purchased 20 percent of the outstanding shares of Temp Company for $70,000 on January 1, 20X6. The following results are reported for Temp Company:

20X6

20X7

20X8

Net income

$

40,000

$

35,000

$

60,000

Dividends paid

15,000

30,000

20,000

Fair value of shares held by Gant:

January 1

70,000

89,000

86,000

December 31

89,000

86,000

97,000

Required:

Determine the amounts reported by Gant as income from its investment in Temp for each year and the balance in Gant’s investment in Temp at the end of each year assuming Gant uses the following methods in accounting for its investment in Temp (Omit the “$” sign in your response):

a.

Cost method.

20X6

20X7

20X8

Dividend income

$

$

$

Balance in investment

$

$

$

b.

Equity method.

20X6

20X7

20X8

Income from investment

$

$

$

Balance in investment

$

$

$

c.

Fair value method.

20X6

20X7

20X8

Income from investment

$

$

$

Balance in investment

$

Order your essay today and save 30% with the discount code: RESEARCHOrder Now