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kolibeilfuss
11.02.2020 •
Business
On 1/1/2008 Aero Company purchased 10% of Bert Company’s common stock for $80,000, which was equal to 10% of the book value of Bert on 1/1/2008. Aero appropriately used the cost method of accounting for its investment. Aero purchased an additional 25% of Bert's common stock on 1/1/2010 for $190,000 which was also equal to its share of book value at that date. Aero can now exercise significant influence over the operating and financial policies of Bert. The total net income and dividends of Bert are as follows:
Year Net Income Dividends
2008 $50,000 $20,000
2009 $75,000 $30,000
2010 $100,000 $50,000
1) Based on the information given above, the amount of income that Aero would report on its income statement related to its investment in Bert for 2009 is:
2) Based on the information given above, what is the carrying value of the investment in Bert on Aero's books after any adjustments made on 1/1/2010 to account for its additional purchase of Bert shares?
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