On January 1, 20X1, Peace, Inc., acquired 70 percent of Silver's outstanding voting stock. No excess fair-value amortization resulted from the acquisition. On January 1, 20X1, Peace sold equipment to Silver for $20,000. This asset originally cost $32,000 but had a January 1, 20X1, book value of $16,000. At the time of transfer, the equipment's remaining life was estimated to be four years. Silver reported net income of $120,000 for year 20X2. Assume Peace applied equity method to account for this investment. Compute the amount of Income from Silver Peace would record in its internal record for year 20X2: ANSWER IS NOT $84,000
On January 1, 20X1, Peace, Inc., acquired 70 percent of Silver's outstanding voting stock. No excess fair-value amortization resulted from the acquisition. On January 1, 20X1, Peace sold equipment to Silver for $20,000. This asset originally cost $32,000 but had a January 1, 20X1, book value of $16,000. At the time of transfer, the equipment's remaining life was estimated to be four years. Silver reported net income of $120,000 for year 20X2. Assume Peace applied equity method to account for this investment. Compute the amount of Income from Silver Peace would record in its internal record for year 20X2: ANSWER IS NOT $84,000
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter13: Investments And Long-term Receivables
Section: Chapter Questions
Problem 8MC
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On January 1, 20X1, Peace, Inc., acquired 70 percent of Silver's outstanding voting stock. No excess fair-value amortization resulted from the acquisition.
On January 1, 20X1, Peace sold equipment to Silver for $20,000. This asset originally cost $32,000 but had a January 1, 20X1, book value of $16,000. At the time of transfer, the equipment's remaining life was estimated to be four years. Silver reported net income of $120,000 for year 20X2. Assume Peace applied equity method to account for this investment. Compute the amount of Income from Silver Peace would record in its internal record for year 20X2:
ANSWER IS NOT $84,000
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