Steinbart reports net income of $104,500 in 2023 and $139,300 in 2024 and declares $20,000 in dividends each year. What is the equity income in Steinbart to be reported by Alex in
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Alex, Incorporated, buys 30 percent of Steinbart Company on January 1, 2023, for $599,000. The equity method of accounting is to be used. Steinbart’s net assets on that date were $1.65 million. Any excess of cost over book value is attributable to a trade name with a 20-year remaining life. Steinbart immediately begins supplying inventory to Alex as follows:
| Year | Cost to Steinbart | Transfer Price | Amount Held by Alex at Year-End (at transfer price) |
|---|---|---|---|
| 2023 | $ 171,760 | $ 226,000 | $ 56,500 |
| 2024 | 118,320 | 174,000 | 53,000 |
The inventory held at the end of one year by Alex is sold at the beginning of the next.
Steinbart reports net income of $104,500 in 2023 and $139,300 in 2024 and declares $20,000 in dividends each year. What is the equity income in Steinbart to be reported by Alex in 2024?
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- Cheese Partners has decided to close the store. At the date of closing, Cheese Partners had the following account balances: A competitor agrees to buy the inventory and store fixtures for $20,000. Prepare the journal entries detailing the liquidation, assuming that partners Colette and Swarma are sharing profits on a 50:50 basis:Alex, Inc., buys 40 percent of Steinbart Company on January 1, 2017, for $530,000. The equity method of accounting is to be used. Steinbart’s net assets on that date were $1.2 million. Any excess of cost over book value is attributable to a trade name with a 20-year remaining life. Steinbart immediately begins supplying inventory to Alex as follows:Inventory held at the end of one year by Alex is sold at the beginning of the next.Steinbart reports net income of $80,000 in 2017 and $110,000 in 2018 and declares $30,000 in dividends each year. What is the equity income in Steinbart to be reported by Alex in 2018?a. $34,050b. $38,020c. $46,230d. $51,450Alex, Inc., buys 40 percent of Steinbart Company on January 1, 2020, for $530,000. The equity method of accounting is to be used. Steinbart’s net assets on that date were $1.2 million. Any excess of cost over book value is attributable to a trade name with a 20-year remaining life. Steinbart immediately begins supplying inventory to Alex as follows: Year Cost to Steinbart Transfer Price Amount Held by Alex at Year-End (at transfer price) 2020 70,000 100,00 25,000 2021 96,000 150,000 45,000 Inventory held at the end of one year by Alex is sold at the beginning of the next. Steinbart reports net income of $80,000 in 2020 and $110,000 in 2021 and declares $30,000 in dividends each year. What is the equity income in Steinbart to be reported by Alex in 2021? How do you get the answer and how do you get trade name price? a. $34,050 b. $38,020 c. $46,230 d. $51,450
- Alex, Inc., buys 30 percent of Steinbart Company on January 1, 2020, for $762,000. The equity method of accounting is to be used. Steinbart’s net assets on that date were $2.30 million. Any excess of cost over book value is attributable to a trade name with a 20-year remaining life. Steinbart immediately begins supplying inventory to Alex as follows: Year Cost to Steinbart Transfer Price Amount Held by Alexat Year-End(at transfer price) 2020 $202,160 $266,000 $66,500 2021 117,990 171,000 52,000 Inventory held at the end of one year by Alex is sold at the beginning of the next. Steinbart reports net income of $95,500 in 2020 and $130,300 in 2021 and declares $30,000 in dividends each year. What is the equity income in Steinbart to be reported by Alex in 2021?Panner, Inc., owns 30 percent of Watkins and applies the equity method. During the current year, Panner buys inventory costing $54,000 and then sells it to Watkins for $90,000. At the end of the year, Watkins still holds only $20,000 of merchandise. What amount of gross profit must Panner defer in reporting this investment using the equity method?a. $2,400b. $4,800c. $8,000d. $10,800Parkette, Inc., acquired a 60 percent interest in Skybox Company several years ago. During 2020, Skybox sold inventory costing $90,200 to Parkette for $110,000. A total of 12 percent of this inventory was not sold to outsiders until 2021. During 2021, Skybox sold inventory costing $294,800 to Parkette for $335,000. A total of 29 percent of this inventory was not sold to outsiders until 2022. In 2021, Parkette reported cost of goods sold of $527,500 while Skybox reported $422,500. What is the consolidated cost of goods sold in 2021? Multiple Choice a $605,718. b $959,282. c $635,400. d $624,282.
- Camille, Inc., sold $147,000 in inventory to Eckerle Company during 2020 for $245,000. Eckerle resold $109,000 of this merchandise in 2020 with the remainder to be disposed of during 2021. Assuming that Camille owns 34 percent of Eckerle and applies the equity method, what journal entry is recorded at the end of 2020 to defer the intra-entity gross profit?Sansa Co. acquired 60% interest in Arya on January 1, 2025 for $46,800 when Arya's net assets had a book value equal to its fair value of $79,000. On the same year, Sansa sold inventory items costing $78,000 to Arya for $104,000 and Arya's inventory at December 31, 2025 included one-fourth of this merchandise. Sansa reported separate income from its own operations of $48,800, and Arya reported a net loss of $19,500 for the year. Compute for the consolidated net income,2025.On January 1, 2020, Merlo Company acquired 80% of the stocks of Fritzie Company for P2,000,000. On this date, Fritzie Company had P1,000,000 of Capital Stock and P800,000 of Retained Earnings. On this date, the carrying values of the identifiable assets and liabilities of Fritzie Company are equal to their fair values.During the year, Merlo Company ships merchandise to Fritzie Company merchandise amounting to P800,000, which includes 25% gross profit rate. At the end of the year, records show the following: Merlo Company Fritzie CompanyInventories, Jan 1. P350,000 P120,000Inventories, Dec. 31 400,000 200,000Sales 5,500,000 2,500,000Cost of Sales 3,200,000 1,600,000Operating expenses 650,000 300,000Dividends paid 500,000 350,000The ending…
- Pitino acquired 90 percent of Brey's outstanding shares on January 1, 2019, in exchange for $486,000 in cash. The subsidiary's stockholders' equity accounts totaled $470,000, and the noncontrolling interest had a fair value of $54,000 on that day. However, a building (with a ten-year remaining life) in Brey's accounting records was undervalued by $45,000. Pitino assigned the rest of the excess fair value over book value to Brey's patented technology (four-year remaining life). Brey reported net income from its own operations of $80,000 in 2019 and $96,000 in 2020. Brey declared dividends of $27,000 in 2019 and $31,000 in 2020. Brey sells inventory to Pitino as follows: Year Cost to Brey Transfer Price to Pitino Inventory Remaining at Year-End (at transfer price) 2019 $ 85,000 $ 195,000 $ 41,000 2020 118,250 215,000 53,000 2021 156,000 240,000 40,000 At December 31, 2021, Pitino owes Brey $32,000 for inventory acquired during the…On January 1, 2024, Alamar Corporation acquired a 40 percent interest in Burks, Incorporated, for $210,000. On that date, Burks's balance sheet disclosed net assets with both a fair and book value of $360,000. During 2024, Burks reported net income of $80,000 and declared and paid cash dividends of $25,000. Alamar sold inventory costing $30,000 to Burks during 2024 for $40,000. Burks used all of this merchandise in its operations during 2024. Required: Prepare all of Alamar's 2024 journal entries to apply the equity method to this investment. Record the acquisition of a 40 percent interest in Burks. Record the accrual of 40 percent of the reported earnings of the investee. Record the investee dividend declaration Record the collection of dividend from investee. Record the income on intra-entity sale.Pitino acquired 90 percent of Brey's outstanding shares on January 1, 2019, in exchange for $342,000 in cash. The subsidiary's stockholders' equity accounts totaled $326,000, and the noncontrolling interest had a fair value of $38,000 on that day. However, a building (with a nine-year remaining life) in Brey's accounting records was undervalued by $18,000. Pitino assigned the rest of the excess fair value over book value to Brey's patented technology (six-year remaining life). Brey reported net income from its own operations of $64,000 in 2019 and $80,000 in 2020. Brey declared dividends of $19,000 in 2019 and $23,000 in 2020. Brey sells inventory to Pitino as follows: Year Cost to Brey Transfer Price to Pitino Inventory Remaining at Year-End (at transfer price) 2019 $ 69,000 $ 115,000 $ 25,000 2020 81,000 135,000 37,500 2021 92,800 160,000 50,000 At December 31, 2021, Pitino owes Brey $16,000 for inventory acquired during the…
