Agee Corporation Acquired a 35% Interest in Trent Company on January

question 73

Essay

Agee Corporation acquired a 35% interest in Trent Company on January 1, 2015, for $500,000. At that time, Trent had 1,000,000 shares of its $1 par common stock issued and outstanding. During 2015, Trent paid cash dividends of $160,000 and thereafter declared and issued a 5% common stock dividend when the fair value was $2 per share. Trent's net income for 2015 was $360,000. What is the balance in Agee's equity investment account at the end of 2015?

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Definitions:

Average Total Cost

Represents the per-unit total cost of production, calculated by dividing the total cost by the total quantity produced.

Falling

The process or action of moving downwards, typically used in economics to describe a decrease in prices or values.

Short Run

In economics, the short run refers to a period during which at least one of a firm's inputs cannot be changed, limiting its capacity to adjust to demand changes.

Long Run

A period during which all factors of production and costs are variable, allowing full adjustment to any change in market conditions.