On January 1, 2021, Hemingway Co. acquired all of the common stock of Crotec Corp. For 2021, Crotec earned net income of $390,000 and paid dividends of $225,000. Amortization of the patent allocation that was included in the acquisition was $13,000. How much difference would there have been in Hemingway's income with regard to the effect of the investment, between using the equity method or using the initial value method of internal recordkeeping? Select one: a. $178,000. Ob. $13,000. OC. $167,000. d. $165,000. Oe. $152,000.
On January 1, 2021, Hemingway Co. acquired all of the common stock of Crotec Corp. For 2021, Crotec earned net income of $390,000 and paid dividends of $225,000. Amortization of the patent allocation that was included in the acquisition was $13,000. How much difference would there have been in Hemingway's income with regard to the effect of the investment, between using the equity method or using the initial value method of internal recordkeeping? Select one: a. $178,000. Ob. $13,000. OC. $167,000. d. $165,000. Oe. $152,000.
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
ChapterA2: Investments
Section: Chapter Questions
Problem 25E
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Transcribed Image Text:On January 1, 2021, Hemingway Co. acquired all of the common stock of
Crotec Corp. For 2021, Crotec earned net income of $390,000 and paid
dividends of $225,000. Amortization of the patent allocation that was
included in the acquisition was $13,000.
How much difference would there have been in Hemingway's income with
regard to the effect of the investment, between using the equity method or
using the initial value method of internal recordkeeping?
Select one:
O a. $178,000.
b. $13,000.
Oc. $167,000.
d. $165,000.
Oe. $152,000.
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