Carrying value of clydes investment


In January of 2011, Clyde Corporation acquired 20% of the outstanding voting common stock of Blake Company for $280,000. This investment enabled Clyde to exercise significant influence over Blake. The book value of the acquired shares was $210,000. The excess of cost over book value was attributed to an identifiable intangible asset that was undervalued on Blake's balance sheet and that had a remaining useful life of 10 years.

For the year ended December 31, 2011, Blake reported income of $63,000 and paid cash dividends of $14,000 on its common stock. What is the proper carrying value of Clyde's investment in Blake at December 31, 2011?

A) $270,000

B) $273,000

C) $280,000

D) $282,800

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Accounting Basics: Carrying value of clydes investment
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