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Renfroe, Inc. acquired 10% of Stanley Corporation on January 4, 2020, for $90,000 when the...

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Accounting

Renfroe, Inc. acquired 10% of Stanley Corporation on January 4, 2020, for $90,000 when the book value of Stanley was $1,000,000. During 2020, Stanley reported net income of $215,000 and paid dividends of $50,000. The book value of the 10% investment was the same as the fair value of that investment when, on January 1, 2021, Renfroe purchased an additional 30% of Stanley for $325,000. Any excess of cost over book value is attributable to goodwill with an indefinite life. During 2021, Stanley reported net income of $320,000 and paid dividends of $50,000.

What is the balance in the Investment in Stanley Corporation on December 31, 2021?

rev: 03_17_2021_QC_CS-257653

Multiple Choice

  • $415,000.

  • $512,500.

  • $523,000.

  • $539,500.

  • $544,500.

The answer isn't $539,500 or $415,000.

Please show work. Thank you.

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