Figure:
Jans Inc -If the Equity Method Had Been Applied, What Would Be

question 33

Multiple Choice

Figure:
Jans Inc. acquired all of the outstanding common stock of Tysk Corp. on January 1, 2009, for $372,000. Equipment with a ten-year life was undervalued on Tysk's financial records by $46,000. Tysk also owned an unrecorded customer list with an assessed fair value of $67,000 and an estimated remaining life of five years.
Tysk earned reported net income of $180,000 in 2009 and $216,000 in 2010. Dividends of $70,000 were paid in each of these two years. Selected account balances as of December 31, 2011, for the two companies follow. $$\begin{array} { l r r } & { \text { Jans } } & { \text { Tysk } } \\\text { Revenues } & \$ 1,080,000 & \$ 840,000 \\\text { Expenses } & 480,000 & 600,000 \\\text { Investment income } & \text { Not given } & 0 \\\text { Retained earnings, 1/1/11 } & 840,000 & 600,000 \\\text { Dividends paid } & 132,000 & 70,000\end{array}$$
-If the equity method had been applied, what would be the Investment in Tysk Corp. account balance within the records of Jans at the end of 2011?

• A) $612,100.
• B) $744,000.
• C) $774,150.
• D) $372,000.
• E) $844,150.

---

Definitions:

Negative Externality

occurs when the production or consumption of a good or service imposes costs on third parties not directly involved in the transaction.

Government Intervention

Actions taken by a government to influence or regulate the economy or specific industries, often to correct market failures or promote social welfare.

Equilibrium Quantity

The quantity of goods or services supplied that is equal to the quantity demanded at the market equilibrium price.

Government Intervention

Actions taken by a government to affect the economy, which can include regulations, subsidies, tariffs, and other forms of involvement.