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

question 7

Essay

Wader's Corporation paid $120,000 for a 25% interest in Shell Company on July 1,2014.No information is available on the fair value of Shell's assets and liabilities.Assume the equity method.Shell's trial balances at July 1,2014 and December 31,2014 were as follows:
Credits
Required:
1.What is Wader's investment income from Shell for the year ending December 31,2014?
2.Calculate Wader's investment in Shell at year end December 31,2014.

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Definitions:

Debt

An amount of money borrowed by one party from another, under the condition that it is to be paid back at a later date, often with interest.

Liquidity

The ease with which an asset can be converted into cash without significant loss in value.

Profitability

Measures how much profit a company generates in relation to its revenues, assets, or equity, indicating its financial health and efficiency.