Wader's Corporation Paid $120,000 for a 25% Interest in Shell

question 25

Essay

Wader's Corporation paid $120,000 for a 25% interest in Shell Company on July 1,2010.No information is available on the fair value of Shell's assets and liabilities.Assume the equity method.Shell's trial balances at July 1,2010 and December 31,2010 were as follows:
Required:
1.What is Wader's investment income from Shell for the year ending December 31,2010?
2.Calculate Wader's investment in Shell at year end December 31,2010.

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Definitions:

Alpha

In finance, alpha is the measure of the active return on an investment compared to a market index used as a benchmark.

Solver

A mathematical tool used to find the optimal solution to a problem by iteratively testing possible solutions.

Exponential Smoothing

A statistical technique for forecasting where recent observations are given progressively higher weights, reducing the importance of older data.

Forecast Error

The difference between the actual demand and the forecasted demand, indicating the accuracy of forecasting methods.