FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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On January 1, 2023, Stream Company acquired 30 percent of the outstanding voting shares of Q-Video, Incorporated, for $720,000. Q-Video manufactures specialty cables for computer monitors. On that date, Q-Video reported assets and liabilities with book values of $1.8 million and $772,000, respectively. A customer list compiled by Q-Video had an appraised value of $298,000, although it was not recorded on its books. The expected remaining life of the customer list was twenty five years with straight-line amortization deemed appropriate. Any remaining excess cost was not identifiable with any particular asset and thus was considered
Q-Video generated net income of $370,000 in 2023 and a net loss of $116,000 in 2024. In each of these two years, Q-Video declared and paid a cash dividend of $18,000 to its stockholders.
During 2023, Q-Video sold inventory that had an original cost of $100,040 to Stream for $164,000. Of this balance, $82,000 was resold to outsiders during 2023, and the remainder was sold during 2024. In 2024, Q-Video sold inventory to Stream for $180,000. This inventory had cost only $144,000. Stream resold $90,000 of the inventory during 2024 and the rest during 2025.
Required:
For 2023 and then for 2024, compute the amount that Stream should report as income from its investment in Q-Video in its external financial statements under the equity method.
Note: Enter your answers in whole dollars and not in millions.
Transcribed Image Text:2023
2024
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