REFERENCE: Ref.06_14 Thomas Inc.had the Following Stockholders' Equity Accounts as of January

question 75

Essay

REFERENCE: Ref.06_14
Thomas Inc.had the following stockholders' equity accounts as of January 1,2009: Kuried Co.acquired all of the voting common stock of Thomas on January 1,2009,for $20,656,000.The preferred stock remained in the hands of outside parties and had a fair value of $3,060,000.A database valued at $656,000 was recognized and amortized over five years.
During 2009,Thomas reported earning $630,000 in net income and paid $504,000 in total cash dividends.Kuried decided used the equity method to account for this investment.
-What was Kuried's balance in the Investment in Thomas Inc.account as of December 31,2009?

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Definitions:

Chart of Accounts

An organized list of all the accounts in a company's general ledger which are used to categorize transactions.

Ledger

A comprehensive collection of all accounts and financial transactions of a company, organization, or individual.

Account Numbers

Unique identifiers assigned to individual accounts in an organization's chart of accounts, facilitating accurate recording, classification, and reporting of financial transactions.

Normal Credit Balances

Accounts with a credit balance as expected in the accounting equation; for instance, liabilities, equity, and revenue accounts normally have credit balances.