FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2022. Demers reported common stock of
$300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were
undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was
attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.
Demers earns income and pays dividends as follows:
Net income
Dividends
2022
$ 100,000
40,000
2023
$ 120,000
50,000
2024
$ 130,000
60,000
Assume the equity method is applied.
Compute Pell's equity income from Demers for the year ended December 31, 2023.
Multiple Choice
.........
600.100.
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Transcribed Image Text:ved Help Save & Exit 10 eBook Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2022. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired. Demers earns income and pays dividends as follows: Net income Dividends 2022 $ 100,000 40,000 2023 $ 120,000 50,000 2024 $ 130,000 60,000 Assume the equity method is applied. Compute Pell's equity income from Demers for the year ended December 31, 2023. Multiple Choice ......... 600.100. Check my
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