Rasor Inc.uses the equity method of reporting its 40% investment in Ivan Co.The balance in the Investment in Ivan was $50,750 at January 1,20X3.During the next three years,Ivan reported the following net earnings (losses)and dividends paid.
Required:
Calculate the balance of the Investment in Ivan account at December,31 20X5.
Definitions:
Abnormal Earnings
Income that deviates significantly from what is typical or expected, usually referring to profits significantly higher or lower than those typical for the industry or the company's history.
Valuation Approach
The methodologies and procedures used to determine the value of an asset, a company, or a financial instrument.
Expected Earnings
The anticipated profit or income generated by an investment or a business activity in a future period.
Disadvantages
The drawbacks or unfavorable aspects associated with a particular decision, action, or strategy.
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