Heidebrecht Design acquired 30% of the outstanding common stock of Quayle Company on January 1, 2014, by paying $729,000 for the 40,500 shares. Quayle declared and paid $0.50 per share cash dividends on March 15, June 15, September 15, and December 15, 2014. Quayle reported net income of $356,300 for the year. At December 31, 2014, the market price of Quayle common stock was $25 per share. Indicate the balance sheet and income statement account balances at December 31, 2014, under each method of accounting Stock investment Unrealized gain Solution Unrealized gain = 40500 * 25 - 729000= $283500 Dividend revenue = 0.50 x 4 x 40500 = $91000 Revenue from stock investments Balance Sheet : $729000 + 30/100 * $356,300 - $91000 (reduction in cash balance due to payment of dividend) = $744890 Income Statement: 30/100 * 356300 + 91000 = $197890 .

1. Heidebrecht Design acquired 30% of the outstanding common stock of Quayle Company on
January 1, 2014, by paying $729,000 for the 40,500 shares. Quayle declared and paid $0.50 per
share cash dividends on March 15, June 15, September 15, and December 15, 2014. Quayle
reported net income of $356,300 for the year. At December 31, 2014, the market price of Quayle
common stock was $25 per share.
Indicate the balance sheet and income statement account balances at December 31, 2014, under
each method of accounting
Stock investment
Unrealized gain
Solution
Unrealized gain = 40500 * 25 - 729000= $283500
Dividend revenue = 0.50 x 4 x 40500 = $91000
Revenue from stock investments
Balance Sheet : $729000 + 30/100 * $356,300 - $91000 (reduction in cash balance due to
payment of dividend)
= $744890
Income Statement: 30/100 * 356300 + 91000 = $197890