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Ramtha Company bought 40% ownership in UAE company on 1-1-2017, at book value. In 2017, 2018,...

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Accounting

Ramtha Company bought 40% ownership in UAE company on 1-1-2017,at book value. In 2017, 2018, and 2019, UAE reported net income of$16,000, $24,000, and $ $40,000, and dividends of $30,000, $20,000,and $20,000 respectively. During the periods from 2017 to 2019 themarket value of Ramtha’ investment in UAE’ stock increased by $4000each year. The balance in Ramtha company’s investment account onDecember 31, 2019, was $104,000

Determine the amount that Ramtha paid for it is investment inUAE stock assuming that Ramtha accounted for it is investmentusing:

Fair Value Method

Answer & Explanation Solved by verified expert
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Solution Year 2017 Let amount paid by Ramtha for its investment in UAE stock as on Jan 012017 x Proportionate shareie 40 of Ramtha in the net income of UAE stock in 2017 1600040 6400 Amount of Investment of Ramatha in UAE stock to be reduced by the    See Answer
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