The Following Information Applies to Questions 32 - 34

question 23

Multiple Choice

The following information applies to Questions 32 - 34
On January 1, 20X2, Ephraim Corporation acquired 80 percent of Lilac Corporation for $200,000 cash. Lilac reported net income of $25,000 each year and dividends of $5,000 each year for 20X2, 20X3, and 20X4. On January 1, 20X2, Lilac reported common stock outstanding of $160,000 and retained earnings of $40,000, and the fair value of the noncontrolling interest was $50,000. It held land with a book value of $90,000 and a market value of $100,000, and equipment with a book value of $40,000 and a market value of $48,000 at the date of combination. The remainder of the differential at acquisition was attributable to an increase in the value of patents, which had a remaining useful life of eight years. All depreciable assets held by Lilac at the date of acquisition had a remaining economic life of eight years. Ephraim uses the equity method in accounting for its investment in Lilac.
-Based on the preceding information,what balance would Ephraim report as its investment in Lilac at January 1,20X5?

• A) $236,000
• B) $248,000
• C) $260,000
• D) $300,000

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Definitions:

Revolutionary War

The war fought between 1775 and 1783 when the American colonies won independence from British rule; also known as the American Revolutionary War.

British Support

Assistance or backing provided by the United Kingdom, which may involve diplomatic, military, or economic aid to other countries or entities.

Battle of Yorktown

The decisive engagement in 1781 during the American Revolutionary War, where American and French forces defeated British troops, leading to the end of major hostilities.

Nathaniel Greene

A major general of the Continental Army in the American Revolutionary War, known for his successful military strategies against the British in the southern campaign.