How should b-b account for its investment in grapevine auto

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Reference no: EM132693284

B&B Cars of Dallas, acquired an 80% interest in Grapevine Auto on December 31 for $485,000. B&B has the ability to exercise significant influence on management decisions. During the year, Grapevine Auto reported net income of $80,000 and paid cash dividends of $20,000.

Problem 1: How should B&B account for its investment in Grapevine Auto?

A. Apply the equity method and perform a full consolidation.

B. Apply the equity method and report the investment at market value at year end.

C. Apply mark-to-market accounting and consolidate the statements at year end.

D. Account for the investment as a special purpose entity.

Reference no: EM132693284

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