1. Drummond Co. recently underwent a sell-off of its home gardening and repair subsidiary, Missoula Co., to an independent party.
If Drummond recorded a gain of $94,130 on the carve out and received $128,310 cash for the sale, what are the net assets of Missoula?
A. $128,310
B. $ 94,130
C. $ 34,180
D. $222,440
E. None of the above
2. Champaign Corporation purchases 45% of the common stock of Rockville, Inc. at a purchase price of $21.6 million cash. During the year, Rockville reports net income of $2,960,000 and pays $544,000 of cash dividends. At the end of the year, the market value of Champaign’s investment is $23.7 million.
What is the year-end balance of the equity investment in Rockville?
A. $22,687,200
B. $25,010,000
C. $24,332,500
D. $21,600,000
E. None of the above