Tulsa Corporation purchased 15 percent of the common stock of Holden Company on January 1, 2002, for $525,900, the stock's underlying book value. During 2002 and 2003, Holden reported net income of $70,000 and $84,000, respectively, and paid dividends of $20,000 for each of the 2 years. On January 2, 2004, Tulsa purchased additional shares of Holden for $1,200,000 when the book value of Holden's net assets equaled $3,620,000. Any differential associated with the 2004 acquisition is attributable to a patent with a 10-year remaining life. After the purchase of the additional Holden shares, Tulsa owned 40 percent of Holden and could exercise significant influence. For the year ended 2004, Holden reported net income of $200,000 and paid dividends of $80,000.
Prepare a schedule to show the correct balance at December 31, 2004 of Tulsa's Investment in Holden Stock account beginning with the 2002 purchase.
When Tulsa purchased 15% of Holden's stock, they recorded 525,900 in the Investment in Holden account. For the next 2 years they didn't change ...
This Solution contains calculations to aid you in understanding the Solution to this question.