Reference no: EM132884750
Question - Berry Corporation acquired as a long term investment for $7,000,000 a 40% interest in an investee when the fair value of the net assets was $17,500,000 on January 1, 2017. The investee has reported the following net losses:
2017 - 5,000,000
2018 - 7,000,000
2019 - 8,000,000
2020 - 4,000,000
Berry Corporation made cash advances of $2,000,000 to the investee on January 1, 2019. On December 31, 2020, it is not expected that Berry Corporation will provide further financial support for the investee. Assuming in 2021, the investee earned a net income of $3,000,000, what amount should be recognized by Berry Corporation as its share in the 2021 net income of the investee?
Liz Inc. owned 20% of Clee Corporation's preference share capital and 50% of the ordinary share capital. Clee Corporation's share capital outstanding comprised the following at year-end:
10% cumulative preference share capital - 2,000,000
Ordinary share capital - 7,000,000
Clee Corporation reported net income of $5,000,000 for the current year. What amount is the balance of investment in Clee Corporation at the end of the current year?