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What is the investment income that should be recognized

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Reference no: EM133108297

Question - On January 1, 2021, Adi Company purchased 25,000 shares of Game Company which represent a 10% interest for $2M. Adi used the cost method. Foie reported net income of $4,000,00 and paid $1.5M cash dividends in 2021. On January 1, 2022, Adi paid $5M for 50,000 additional shares of Foie Company. It was determined that the fair value of the previous 10% interest was $2.5M on January 1, 2022. The fair values of the identifiable assets of Foie Company equal carrying amount of $15M on purchase date except for land whose fair value exceeded carrying amount by $2M. For the year ended December 31, 2022, Foie reported net income of $8M and paid cash dividends of $20 per share.

Required -

1) What is the investment income that should be recognized in 2021?

2) What is goodwill arising from the acquisition in 2022?

3) What is total income should be recognized in 2022?

4) What is carrying amount of the investment on December 31, 2022?

5) What is gain from increase in FV?

6) What is dividends Received?

Reference no: EM133108297

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