Question
Cayman Inc. bought 25% of Maya Company on January 1, 2021 for $800,000. The equity method of accounting was used. The book value and
Cayman Inc. bought 25% of Maya Company on January 1, 2021 for $800,000. The equity method of accounting was used. The book value and fair value of the net assets of Maya on that date were $2,100,000. Maya began supplying inventory to Cayman as follows: Year Cost to Maya Transfer Price Amount Held by Cayman at Year-End 2021 $ 30,000 $ 45,000 $ 2022$ 48,000 $ 80,000 $ 8,400 20,000 Maya reported net income of $100,000 in 2021 and $120,000 in 2022 while paying $40,000 in dividends each year. What is equity in Maya income that should be recognized by Cayman in 2022? Oa. $28,700 O b. $31,300 Oc. $2,000 Od. $30,000 Oe. $25,000
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