Question

assume that, on january 1, 2024, matsui company paid $2,376,000 for its investment in 66,000 shares of yankee incorporated further, assume that yankee has 330,000 total shares of stock issued. the book value and fair value of yankee's identifiable net assets were both $660,000 at january 1, 2024. the following information pertains to yankee during 2024:Net income $240,000Dividends declared and paid $72,000Market price of common stock on 12/31/2024 $29/shareWhat amount would Matsui report in its year-end 2024 balance sheet for its investment in Yankee?a. $1,608,000.b. $1,368,000.c. $1,329,600.d. None of these answer choices is correct.

Answer 1

The answer is: C. $2,422,200

Calculations:

Percentage of holdings of Matsui in Yankee= 66000/330000= 20%

Investment in Yankee

= Amount paid for investment + Share in net income-Share in dividends= 2376000+(330000*0.20)-(99000*0.20)= $2,422,200

What is investment?

Investing is using money to buy an asset and increase its value over a period of time. Making an investment requires sacrificing your current assets such as time, money and effort.

In finance, the purpose of investment is to make a profit on the money invested. Income consists of realized gains (profits) or losses on the sale of property or investments, appreciation (or depreciation) of unrealized capital, or investment income such as dividends, interest or rental income, or a combination of capital gains and income. may occur. Returns may also include currency gains or losses due to exchange rate fluctuations.

Investors generally expect higher returns from riskier assets. Low-risk investments usually have lower returns as well. Similarly, the higher the risk, the higher the potential for large losses.

Therefore, correct option is c: $2,422,200.

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