Oakbrook Travel, Inc. acquired an 80% interest in Island Cruises on December 31 for $485,000. Oakbrook has the ability to exercise significant influence on management decisions. The Island Cruises...

Oakbrook Travel, Inc. acquired an 80% interest in Island Cruises on December 31 for $485,000. Oakbrook has the ability to exercise significant influence on management decisions. The Island Cruises stock is publically traded. During the year, Island Cruises reported net income of $80,000 and paid cash dividends of $20,000.

How should Oakbrook Travel account for its investment in Island Cruises?

Select one:

A. Apply the equity method and report the investment at market value at year end.

B. Account for the investment as a special purpose entity.

C. Apply the equity method and perform a full consolidation.

D. Apply mark-to-market accounting and consolidate the statements at year end.

Jun 09, 2022

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Oakbrook Travel, Inc. acquired an 80% interest in Island Cruises on December 31 for $485,000. Oakbrook has the ability to exercise significant influence on management decisions. The Island Cruises...

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