Jans Inc Acquired All of the Outstanding Common Stock of Tysk

question 12

Multiple Choice

Jans Inc. acquired all of the outstanding common stock of Tysk Corp. on January 1, 2011, for $372,000. Equipment with a ten-year life was undervalued on Tysk's financial records by $46,000. Tysk also owned an unrecorded customer list with an assessed fair value of $67,000 and an estimated remaining life of five years. Tysk earned reported net income of $180,000 in 2011 and $216,000 in 2012. Dividends of $70,000 were paid in each of these two years. Selected account balances as of December 31, 2013, for the two companies follow. $$\begin{array} { l r r } & { \text { Jans } } & { \text { Tysk } } \\\text { Revenues } & \$ 1,080,000 & \$ 840,000 \\\text { Expenses } & 480,000 & 600,000 \\\text { Investment income } & \text { Not given } & 0 \\\text { Retained earnings, 1/1/13 } & 840,000 & 600,000 \\\text { Dividends paid } & 132,000 & 70,000\end{array}$$ If the equity method had been applied, what would be the Investment in Tysk Corp. account balance within the records of Jans at the end of 2013?

• A)$612,100.
• B)$744,000.
• C)$774,150.
• D)$372,000.
• E)$844,150.

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Definitions:

PO

An abbreviation for "per os," a Latin term meaning "by mouth," indicating that medication should be taken orally.

Nitrostat

A brand name for nitroglycerin, a medication used to treat chest pain (angina) by widening blood vessels.

Apothecary Equivalent

A term used to describe the conversion of measurements used in the apothecary system to those used in the metric system.

Chest Pain

An uncomfortable sensation in the chest that can vary significantly in intensity and can be a symptom of various health conditions, ranging from indigestion to heart attack.