GEN COMBO ADVANCED ACCOUNTING; CONNECT ACCESS CARD
13th Edition
ISBN: 9781260087383
Author: Joe Ben Hoyle
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 1, Problem 25P
a.
To determine
Find the amount of equity method income which Company M would recognize in 2018 from its ownership interest in Company L.
b.
To determine
Find the equity method balance in the Investment in Company L account at the end of 2018.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Matthew, Inc. owns 30 percent of the outstanding stock of Lindman Company and has the ability to significantly influence the investee’s operations and decision making. On January 1, 2018, the balance in the Investment in Lindman account is $365,000. Amortization associated with this acquisition is $12,600 per year. In 2018, Lindman earns an income of $132,000 and declares cash dividends of $33,000. Previously, in 2017, Lindman had sold inventory costing $33,600 to Matthew for $56,000. Matthew consumed all but 20 percent of this merchandise during 2017 and used the rest during 2018. Lindman sold additional inventory costing $44,800 to Matthew for $80,000 in 2018. Matthew did not consume 40 percent of these 2018 purchases from Lindman until 2019.
What amount of equity method income would Matthew recognize in 2018 from its ownership interest in Lindman?
What is the equity method balance in the Investment in Lindman account at the end of 2018?
Matthew, Inc. owns 30 percent of the outstanding stock of Lindman Company and has the ability to significantly influence the investee’s operations and decision making. On January 1, 2018, the balance in the Investment in Lindman account is $335,000. Amortization associated with this acquisition is $9,000 per year. In 2018, Lindman earns an income of $90,000 and declares cash dividends of $30,000. Previously, in 2017, Lindman had sold inventory costing $24,000 to Matthew for $40,000. Matthew consumed all but 25 percent of this merchandise during 2017 and used the rest during 2018. Lindman sold additional inventory costing $28,000 to Matthew for $50,000 in 2018. Matthew did not consume 40 percent of these 2018 purchases from Lindman until 2019.a. What amount of equity method income would Matthew recognize in 2018 from its ownership interest in Lindman?b. What is the equity method balance in the Investment in Lindman account at the end of 2018?
Matthew, Inc. owns 30 percent of the outstanding stock of Lindman Company and has the ability to significantly influence the
investee's operations and decision making. On January 1, 2018, the balance in the Investment in Lindman account is $422,000.
Amortization associated with this acquisition is $15.000 per year. In 2018, Lindman earns an income of $138,000 and declares cash
dividends of $46,000. Previously, in 2017, Lindman had sold inventory costing $35,000 to Matthew for $50,000. Matthew consumed allI
but 25 percent of this merchandise during 2017 and used the rest during 2018. Lindman sold additional inventory costing $42,900 to
Matthew for $65,000 in 2018. Matthew did not consume 40 percent of these 2018 purchases from Lindman until 2019.
a. What amount of equity method income would Matthew recognize in 2018 from its ownership interest in Lindman?
b. What is the equity method balance in the Investment in Lindman account at the end of 2018?
a.
Equity income
b.
Investment in…
Chapter 1 Solutions
GEN COMBO ADVANCED ACCOUNTING; CONNECT ACCESS CARD
Ch. 1 - A company acquires a rather large investment in...Ch. 1 - What accounting treatments are appropriate for...Ch. 1 - Prob. 3QCh. 1 - Why does the equity method record dividends from...Ch. 1 - Prob. 5QCh. 1 - Smith. Inc., has maintained an ownership interest...Ch. 1 - Prob. 7QCh. 1 - Because of the acquisition of additional investee...Ch. 1 - Prob. 9QCh. 1 - Prob. 10Q
Ch. 1 - Prob. 11QCh. 1 - In a stock acquisition accounted for by the equity...Ch. 1 - Prob. 13QCh. 1 - What is the difference between downstream and...Ch. 1 - Prob. 15QCh. 1 - Prob. 16QCh. 1 - What is the fair-value option for reporting equity...Ch. 1 - When an investor uses the equity method to account...Ch. 1 - Which of the following does not indicate an...Ch. 1 - Prob. 3PCh. 1 - Under fair-value accounting for an equity...Ch. 1 - When an equity method investment account is...Ch. 1 - Prob. 6PCh. 1 - In January 2017, Domingo, Inc., acquired 20...Ch. 1 - Prob. 8PCh. 1 - Evan Company reports net income of 140,000 each...Ch. 1 - Perez, Inc., applies the equity method for its 25...Ch. 1 - Prob. 11PCh. 1 - Alex, Inc., buys 40 percent of Steinbart Company...Ch. 1 - Prob. 13PCh. 1 - Prob. 14PCh. 1 - Prob. 15PCh. 1 - On January 1, 2017, Alison, Inc., paid 60,000 for...Ch. 1 - Prob. 17PCh. 1 - Prob. 18PCh. 1 - Prob. 19PCh. 1 - Prob. 20PCh. 1 - Prob. 21PCh. 1 - Echo, Inc., purchased 10 percent of ProForm...Ch. 1 - Prob. 23PCh. 1 - Prob. 24PCh. 1 - Prob. 25PCh. 1 - Prob. 26PCh. 1 - Belden, Inc. acquires 30 percent of the...Ch. 1 - Prob. 28PCh. 1 - Prob. 29PCh. 1 - On July 1, 2016, Killearn Company acquired 88,000...Ch. 1 - Prob. 31PCh. 1 - On January 1, 2017, Stream Company acquired 30...Ch. 1 - EXCEL CASE 1 On January 1, 2018, Acme Co. is...Ch. 1 - Access The Coca-Cola Companys SEC 10-K filing at...Ch. 1 - Prob. 4DYSCh. 1 - Prob. 5DYS
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Matthew Inc. owns 30 percent of the outstanding stock of Lindman Company and has the ability to significantly influence the investee's operations and decision making. On January 1, 2018, the balance in the Investment in Lindman account is $335,000. Amortization associated with this acquisition is $9,000 per year. In 2018, Lindman earns an income of $90,000 and declares cash dividends of $30,000. Previously, in 2017, Lindman had sold inventory costing $24,000 to Matthew for $40,000. Matthew consumed all but 25 percent of this merchandise during 2017 and used the rest during 2018. Lindman sold additional inventory costing $28,000 to Matthew for $50,000 in 2018. Matthew did not consume 40 percent of these 2018 purchases from Lindman until 2019. What amount of equity method income would Matthew recognize in 2018 from its ownership interest in Lindman? What is the equity method balance in the Investment in Lindman account at the end of 2018? I need help with the second part (#2) since…arrow_forwardMatthew, Incorporated owns 30 percent of the outstanding stock of Lindman Company and has the ability to significantly influence the investee's operation and decision making. On January 1, 2024, the balance in the Investment in Lindman account is $409,000. Amortization associated with this acquisition is $11,400 per year. In 2024, Lindman earns an income of $83,000 and declares cash dividends of $41,500. Previously, in 2023, Lindman had sold inventory costing $50,400 to Matthew for $72,000. Matthew consumed all but 25 percent of this merchandise during 2023 and used the rest during 2024. Lindman sold additional inventory costing $59,400 to Matthew for $90,000 in 2024. Matthew did not consume 40 percent of these 2024 purchases from Lindman until 2025. Matthew Incorporated ownership in Lindman Matthew Investment in Lindman Amortization Lindman 2024 Income Lindman 2024 Dividends Lindman Inventory Sales to Matthew 2023 Inventory Sale 2024 Inventory Sale Gross Profit Calculations Sales Cost…arrow_forwardSurrell Inc. owns 30% of the outstanding voting common stock of Vicker Co. and has the ability to significantly influence the investee's operations and decision making. On January 1, 2019, the balance in the Investment in Vicker Co. account was $402,000. Amortization associated with this acquisition is $10,800 per year. During 2019, Vicker earned an income of $108,000 and paid cash dividends of $36,000. Previously in 2018, Vicker had sold inventory costing $28,800 to Surrell for $48,000. All but 25% of this merchandise was consumed by Surrell during 2018. The remainder was used during the first few weeks of 2019. Additional sales were made to Surrell in 2019; inventory costing $33,600 was transferred at a price of $60,000. Of this total, 40% was not consumed until 2020. What amount of equity income would Surrell have recognized in 2019 from its ownership interest in Vicker? $9,936. $24,840. $19,872. $21,114. $18,948.arrow_forward
- Matthew owns 30 percent of the outstanding stock of Lindman and has the ability to significantly influence the investee’s operations and decision making. On January 1, 2015, the balance in the Investment in Lindman account is $398,000. Amortization associated with this acquisition is $17,700 per year. In 2015, Lindman earns an income of $206,000 and declares cash dividends of $51,500. Previously, in 2014, Lindman had sold inventory costing $32,900 to Matthew for $47,000. Matthew consumed all but 20 percent of this merchandise during 2014 and used the rest during 2015. Lindman sold additional inventory costing $46,200 to Matthew for $70,000 in 2015. Matthew did not consume 40 percent of these 2015 purchases from Lindman until 2016. a. What amount of equity method income would Matthew recognize in 2015 from its ownership interest in Lindman? b. What is the equity method balance in the Investment in Lindman account at the end of 2015?arrow_forwardBuyCo, Inc. holds 25 percent of the outstanding shares of Marqueen Company and appropriately applies the equity method of accounting. Excess cost amortization (related to a patent) associated with this investment amounts to $10,000 per year. For 2017, Marqueen reported earnings of $100,000 and declares cash dividends of $30,000. During that year, Marqueen acquired inventory for $50,000, which it then sold to BuyCo for $80,000. At the end of 2017, BuyCo continued to hold merchandise with a transfer price of $32,000.a. What Equity in Investee Income should BuyCo report for 2017?b. How will the intra-entity transfer affect BuyCo’s reporting in 2018?c. If BuyCo had sold the inventory to Marqueen, how would the answers to (a) and (b) have changed?arrow_forwardMatthew, Inc., owns 30 percent of the outstanding stock of Lindman Company and has the ability to significantly influence the investee’s operations and decision making. On January 1, 2021, the balance in the Investment in Lindman account is $382,000. Amortization of excess fair value associated with the 30% ownership is $10,500 per year. In 2021, Lindman earns an income of $156,000 and declares cash dividends of $39,000. Previously, in 2020, Lindman had sold inventory costing $54,600 to Matthew for $78,000. Matthew consumed all but 20 percent of this merchandise during 2020 and used the rest during 2021. Lindman sold additional inventory costing $59,400 to Matthew for $90,000 in 2021. Matthew did not consume 40 percent of these 2021 purchases from Lindman until 2022. What amount of equity method income would Matthew recognize in 2021 from its ownership interest in Lindman? What is the equity method balance in the Investment in Lindman account at the end of 2021?arrow_forward
- On 1 October 2018, KING acquired 30,000 of VAM's 100,000 shares in exchange for 75,000 of its own shares. The market value of KING's shares at the date of this share exchange was $3.20 per share. VAM's net profit for the financial year ended 31 March 2019 was $200,000. $40,000 of this profit was made by VAM from 1 April 2018 to 30 September 2018. VAM is the only associate of KING. What amount will be shown as 'investment in associate' in the consolidated statement of financial position of KING as at 31 March 2019? Please provide explaination. A) $288,000 B) $300,000 C) $156,000 D) $252,000 E) None of the abovearrow_forwardMatthew, Inc., owns 30 percent of the outstanding stock of Lindman Company and has the ability to significantly influence the investee's operations and decision making. On January 1, 2021, the balance in the Investment in Lindman account is $335,000. Amortization of excess fair value associated with the 30 percent ownership is $9,000 per year. In 2021, Lindman earns an income of $90,000 and declares cash dividends of $30,000. Previously, in 2020. Lindman had sold inventory costing $24,000 to Matthew for $40,000. Matthew consumed all but 25 percent of this merchandise during 2020 and used the rest during 2021. Lindman sold additional inventory costing $28,000 to Matthew for $50,000 in 2021. Matthew did not consume 40 percent of these 2021 purchases from Lindman until 2022. a. What amount of equity method income would Matthew recognize in 2021 from its ownership interest in Lindman? b. What is the equity method balance in the Investment in Lindman account at the end of 2021?arrow_forwardOn 1 January 2017, Al Yousef Group acquired 30% of the outstanding voting shares of Saleh Enterprises for OMR 2,000,000 in cash, a price that was equal to 30% of Saleh's net assets. The investment gave Al Yousef significant influence over Saleh. During the year ending December 31, 2017, Saleh had Net Income of OMR 200,000 and paid dividends of OMR 40,000. For the year ending December 31, 2018, Saleh had a net income of OMR 250,000, and paid dividends of OMR 50,000. For the year ending December 31, 2019, Saleh's business started to have some operational issues that they had a Net Loss of OMR 25,000, however they still managed to pay dividends of OMR 10,000. For the year ending December 31, 2020, because of COVID-19, Saleh had a Net Loss of OMR 50,000 and no dividends have been paid for 2020. Please answer the following questions pertaining to Al Yousef Company: Questions No. 32, 33 and 34 What will be the journal entry to record the purchase of Saleh's shares on 1 January 2017? a. Dr.…arrow_forward
- On 1 January 2017, Al Yousef Group acquired 30% of the outstanding voting shares of Saleh Enterprises for OMR 2,000,000 in cash, a price that was equal to 30% of Saleh's net assets. The investment gave Al Yousef significant influence over Saleh. During the year ending December 31, 2017, Saleh had Net Income of OMR 200,000 and paid dividends of OMR 40,000. For the year ending December 31, 2018, Saleh had a net income of OMR 250,000, and paid dividends of OMR 50,000. For the year ending December 31, 2019, Saleh's business started to have some operational issues that they had a Net Loss of OMR 25,000, however they still managed to pay dividends of OMR 10,000. For the year ending December 31, 2020, because of COVID-19, Saleh had a Net Loss of OMR 50,000 and no dividends have been paid for 2020. Please answer the following questions pertaining to Al Yousef Company: Questions No. 32, 33 and 34 What will be the journal entry to record their share in Saleh's dividends on December 31, 2017?…arrow_forwardOn 1 January 2017, Al Yousef Group acquired 30% of the outstanding voting shares of Saleh Enterprises for OMR 2,000,000 in cash, a price that was equal to 30% of Saleh's net assets. The investment gave Al Yousef significant influence over Saleh. During the year ending December 31, 2017, Saleh had Net Income of OMR 200,000 and paid dividends of OMR 40,000. For the year ending December 31, 2018, Saleh had a net income of OMR 250,000, and paid dividends of OMR 50,000. For the year ending December 31, 2019, Saleh's business started to have some operational issues that they had a Net Loss of OMR 25,000, however they still managed to pay dividends of OMR 10,000. For the year ending December 31, 2020, because of COVID-19, Saleh had a Net Loss of OMR 50,000 and no dividends have been paid for 2020. Please answer the following questions pertaining to Al Yousef Company: Questions No. 32, 33 and 34 What will be the journal entry to record their share in Saleh's net loss on December 31, 2019? a.…arrow_forwardOn January 1, 2018, Pine Company owns 40 percent (40,000 shares) of Seacrest, Inc., which it purchased several years ago for $182,000. Since the date of acquisition, the equity method has been properly applied, and the carrying amount of the investment account as of January 1, 2018, is $293,600. Excess patent cost amortization of $12,000 is still being recognized each year. During 2018, Seacrest reports net income of $342,000 and a $120,000 other comprehensive loss, both incurred uniformly throughout the year. No dividends were declared during the year. Pine sold 8,000 shares of Seacrest on August 1, 2018, for $93,000 in cash. However, Pine retains the ability to significantly influence the investee.During the last quarter of 2017, Pine sold $50,000 in inventory (which it had originally purchased for only $30,000) to Seacrest. At the end of that fiscal year, Seacrest’s inventory retained $10,000 (at sales price) of this merchandise, which was subsequently sold in the first quarter of…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,
Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSON
Intermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill Education
Financial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education