1. Pepper acquired a 25% stake in Salt on Jan 2, 2019 for $820,000. On Jan 1, 2019 Salt reported $2,000,000 in net assets on its balance sheet. Salt's net assets had historical book values that approximately equaled their fair values, except for a patent that had a fair value equal to $1,000,000 but a book value of $200,000. The patent has a 10-year remaining useful life at January 1, 2019.

What is the identifiable portion of the 25% acquisition accounting premium (AAP) that is contained on Pepper's balance sheet related to its investment in Salt on Jan 2, 2019?

2. Pepper acquired a 25% stake in Salt on Jan 2, 2019 for $820,000. On Jan 1, 2019 Salt reported $2,000,000 in net assets on its balance sheet. Salt's net assets had historical book values that approximately equaled their fair values, except for a patent that had a fair value equal to $1,000,000 but a book value of $200,000. The patent has a 10-year remaining useful life at January 1, 2019.

What is the unidentifiable portion of the 25% acquisition accounting premium (AAP) that is contained on Pepper's balance sheet related to its investment in Salt on Jan 2, 2019?

3. Pepper acquired a 25% stake in Salt on Jan 2, 2019 for $820,000. On Jan 1, 2019 Salt reported $2,000,000 in net assets on its balance sheet. Salt's net assets had historical book values that approximately equaled their fair values, except for a patent that had a fair value equal to $1,000,000 but a book value of $200,000. The patent has a 10-year remaining useful life at January 1, 2019.

In 2019, Salt earned $400,000 in net income and paid a dividend of $100,000. At what value does Pepper report its investment in Salt on its December 31, 2019 balance sheet?

4.Paragraph owns 30% of Sentence and accounts for its investment in Sentence using the equity method. At the beginning of 2020, the "Investment in Sentence" was reported on Paragraph's balance sheet at $400,000. During 2020, Sentence reported net income of $100,000 and paid dividends of $60,000. In addition, Paragraph realized a gross profit of $40,000 on inventory that it sold to Sentence in 2020. At the end of the year 15% of this inventory remained unsold by Sentence.

What is the balance of the "Investment in Sentence" on Paragraph's balance sheet at the end of 2020?

5. Paragraph owns 30% of Sentence and accounts for its investment in Sentence using the equity method. At the beginning of 2020, the "Investment in Sentence" was reported on Paragraph's balance sheet at $400,000. During 2020, Sentence reported net income of $100,000 and paid dividends of $60,000. In addition, Paragraph realized a gross profit of $40,000 on inventory that it sold to Sentence in 2020. At the end of the 2020, 15% of this inventory remained unsold by Sentence.

Assume that all inventories related to the inter-company sales are sold in 2021 and that Sentence reports $150,000 of net income.

How much equity income from its "Investment in Sentence" will Paragraph report for 2021?