Problem 1. On January 2, 2002, Heinreich Co. paid $500,000 for 25% of the voting common stock of Jones Corp. At the time of the investment, Jones had net assets with a book value and fair market value of $1,800,000. During 2002, Jones incurred a net loss of $60,000 and paid dividends of $100,000.
Required:
What is the balance in Heinreich's investment account at December 31, 2002?
Problem 2. Salem Co. had the following account balances as of February 1, 2002:
Bellington Inc. paid $1.7 million in cash and issued 12,000 shares of its $30 par value common stock (valued at $90 per share) for all of Salem's outstanding common stock.
Required:
Determine the balance for Goodwill that would be included in a February 1, 2002, consolidation.