BuyCo, Incorporated, holds 28 percent of the outstanding shares of Marqueen company and appropriately applies the equity
Question:
BuyCo, Incorporated, holds 28 percent of the outstanding shares of Marqueen company and appropriately applies the equity method of accounting. Excess cost amortization (related to a patent associated with this investment amounts to $12,000 per year. For 2023 Marqueen reported earnings of $119,000 and declares cash dividends of $34,000. During that year, Marqueen acquired inventory for $60,000which it then sold to BuyCo for $75,000. At the end of 2023, BuyCo continued to hold merchandise with a transfer price of $27,000.
Required:
What Equity in Investee Income should BuyCo report for 2023?
How will the intra−entity transfer affect BuyCo's reporting in 2024?
If BuyCo had sold the inventory to Marqueen, would your answers to parts a and (b change?
Fundamentals of Advanced Accounting
ISBN: 978-1259722639
7th edition
Authors: Joe Ben Hoyle, Thomas Schaefer, Timothy Doupnik