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On January 1, 2009, Miller Company purchased 25% of Wall Corporation’s common stock; no goodwill resulted...

On January 1, 2009, Miller Company purchased 25% of Wall Corporation’s common stock; no goodwill resulted from the purchase. Miller uses the equity method to account for this investment, and the balance in Miller’s investment account was $190,000 at December 31, 2009. Wall reported net income of $120,000 for the year ended December 31, 2009 and paid common stock dividends totaling $48,000 during 2009. How much did Miller pay for its 25% interest in Wall? Question 14 options: 1) $172,000 2) $202,000 3) $208,000 4) $232,000

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Answer #1
Balance in Miller’s investment account 190000
Less: Share of Net income -30000 =120000*25%
Add: Dividends received 12000 =48000*25%
Amount paid by Miller 172000
Option 1 $172,000 is correct
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