Blanco Company purchased 200 of the 1,000 outstanding shares of Darby Company's common stock for $300,000 on January 2, 2010. During 2010, Darby Company declared dividends of $50,000 and reported earnings for the year of $200,000.
If Blanco Company used the fair value method of accounting for its investment in Darby Company, its Investment in Darby Company account on December 31, 2010 should be
a. $290,000.
b. $330,000.
c. $300,000.
d. $340,000.
Answer: C
If Blanco Company uses the equity method of accounting for its investment in Darby Company, its Investment in Darby Company account at December 31, 2010 should be
a. $290,000.
b. $300,000.
c. $330,000.
d. $340,000.
Answer: C