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Suppose that on January 6,2024, East Coast Motors paid $ 280 comma 000 comma 000...

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Accounting

Suppose that on January 6,2024, East Coast Motors paid $ 280 comma 000 comma 000 for its 35% investment in Boxcar Motors. East Coast has significant influence over Boxcar after the purchase. Assume Boxcar earned net income of $ 90 comma 000 comma 000 and paid cash dividends of $ 45 comma 000 comma 000 to all outstanding stockholders during 2024.(Assume all outstanding stock is voting stock.)
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Part 1
Requirement 1. What method should East Coast Motors use to account for the investment in Boxcar Motors? Give your reasoning.
East Coast Motors should use the
available-for-sale
consolidation
equity
held-to-maturity
method to account for its investment in Boxcar Motors because the investment
creates a parent-subsidiary relationship between East Coast Motors and Boxcar Motors.
in Boxcar is a debt security that East Coast Motors plans to hold to maturity.
represents a 35% ownership of Boxcar Motors and East Coast Motors has significant influence over Boxcar Motors.

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