Steven Company Owns 40% of the Outstanding Voting Common Stock

question 58

Essay

Steven Company owns 40% of the outstanding voting common stock of Nicholas Corp. and has the ability to significantly influence the investee's operations. On January 4, 2021, the balance in the Investment in Nicholas Corp. account was $503,000. Amortization associated with this acquisition is $12,000 per year. During 2021, Nicholas earned net income of $120,000 and paid cash dividends of $40,000. Previously in 2020, Nicholas had sold inventory costing $35,000 to Steven for $50,000. All but 25% of that inventory had been sold to outsiders by Steven during 2020; the remainder was sold in 2021. Additional sales were made to Steven in 2021 at an intra-entity selling price of $75,000. The goods in the intra-entity sales cost Nicholas $54,000. Only 10% of the 2021 intra-entity purchases from Nicholas had not been sold to outsiders by the end of 2021.What was the balance in the Investment in Nicholas Corp. account at December 31, 2021?

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Definitions:

Receptors

Proteins located on the surface of cells or within cells that bind to specific substances and trigger a response in the cell.

Oxytocin

A hormone often associated with bonding, love, and social connection, playing a key role in human relationships.

Social Bonding

The process of development and maintenance of close and meaningful relationships between individuals.

Bloodstream

The bloodstream is the system of blood vessels (arteries, veins, and capillaries) through which blood circulates throughout the body, delivering oxygen and nutrients to tissues and removing waste products.