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Alex, Inc., buys 30 percent of Steinbart Company on January 1, 2017, for $544,000. The equity method of accounting is to be used. Steinbart's net
Alex, Inc., buys 30 percent of Steinbart Company on January 1, 2017, for $544,000. The equity method of accounting is to be used. Steinbart's net assets on that date were $1.50 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: Amount Held by Alex at Year-End Year Cost to Steinbart Transfer Price (at Transfer Price) 2017 $ 123,000 $164,000 $41,000 2018 145,530 220,500 68,500 Inventory held at the end of one year by Alex is sold at the beginning of the next. Steinbart reports net income of $104,000 in 2017 and $137,300 in 2018 and declares $40,000 in dividends each year. What is the equity income in Steinbart to be reported by Alex in 2018? Multiple Choice o $32,578. $32,578. o $27,768. $27,768. $46,078. $42,178
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