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The Following Information Pertains to Questions

question 27

Multiple Choice

The following information pertains to questions
LEO Inc.acquired a 60% interest in MARS Inc.on January 1,2008 for $400,000.LEO uses the Cost method to account for its investment MARS Inc.On that date,MARS had common stock and retained earnings valued at $100,000 and $150,000 respectively.The acquisition differential was allocated as follows:
$80,000 to inventory.
$40,000 to equipment (To be amortized over 20 years)
The following took place during 2008:
MARS reported a net income and declared dividends of $25,000 and $5,000 respectively.
LEO's December 31,2008 inventory contained an intercompany profit of $10,000.
LEO's net income was $75,000.
The following took place during 2009:
MARS reported a net income and declared dividends of $36,000 and $6,000 respectively.
MARS' December 31,2009 inventory contained an intercompany profit of $5,000.
LEO's net income was $48,000.
Both companies are subject to a 25% tax rate.All intercompany sales as well as sales to outsiders are priced to provide the selling company with gross Margin of 20%.
-What would be the balance in the investment in MARS account at December 31,2009?

Definitions:

Family Therapy

A form of psychotherapy that focuses on work with families and couples in intimate relationships.

Reframing

A strategy in which problems are restated so that they can be more easily dealt with.

Interacting

Engaging or influencing mutually or reciprocally between individuals or entities.

Effective Therapies

Therapeutic interventions that have been proven through research to be successful in treating specific disorders or issues.