On 5/1/X2 , Pixco issued shares of its voting common stock in exchange for 60% of Stixco's outstanding common stock as a business combination appropriately accounted for under the purchase method. Both companies have a December 31 year-end. Selected information for each company follows: 14. Pixco Stixco Net income from own separate operations (exclusive of earnings recorded under either the equity method or the cost method): 4 months ended 4/30/X2. 8 months ended 12/31/X ..$2,000,000 $200,000 6,000,000 $8,000,000 $700,000 500,000 Dividends declared: 4 months ended 4/30/X1.. 8 months ended 12/31/X. $ 900,000 $100,000 300,000 $400,000 2,000,000 $2,900,000 Parent's recorded amortization of $70,000 cost in excess of book value for 191.... What is the parent's net income for 101 under the equity method? a. $8,230,000 b. $8,350,000 C. $8,410,000 d. $8,480,000 e. None of the above.
On 5/1/X2 , Pixco issued shares of its voting common stock in exchange for 60% of Stixco's outstanding common stock as a business combination appropriately accounted for under the purchase method. Both companies have a December 31 year-end. Selected information for each company follows: 14. Pixco Stixco Net income from own separate operations (exclusive of earnings recorded under either the equity method or the cost method): 4 months ended 4/30/X2. 8 months ended 12/31/X ..$2,000,000 $200,000 6,000,000 $8,000,000 $700,000 500,000 Dividends declared: 4 months ended 4/30/X1.. 8 months ended 12/31/X. $ 900,000 $100,000 300,000 $400,000 2,000,000 $2,900,000 Parent's recorded amortization of $70,000 cost in excess of book value for 191.... What is the parent's net income for 101 under the equity method? a. $8,230,000 b. $8,350,000 C. $8,410,000 d. $8,480,000 e. None of the above.
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
ChapterA2: Investments
Section: Chapter Questions
Problem 24E
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Transcribed Image Text:On 5/1/X2 , Pixco issued shares of its voting common stock in exchange for 60% of
Stixco's outstanding common stock as a business combination appropriately accounted for
under the purchase method. Both companies have a December 31 year-end. Selected
information for each company follows:
14.
Pixco
Stixco
Net income from own separate operations
(exclusive of earnings recorded under either
the equity method or the cost method):
4 months ended 4/30/X.
8 months ended 12/31/X
$2,000,000 $200,000
6,000,000
$8,000,000
500,000
$700,000
Dividends declared:
4 months ended 4/30/X.
8 months ended 12/31/Xa.
$ 900,000 $100,000
2,000,000
$2,900,000
300,000
$400,000
Parent's recorded amortization of
$70,000
cost in excess of book value for 101.
What is the parent's net income for 101 under the equity method?
a. $8,230,000
b. $8,350,000
C. $8,410,000
d. $8,480,000
e. None of the above.
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