Question
Market Inc. owns 25% of Pearl Co. and has the ability to significantly influence the investee's operations and decision making. During 2018 Pearl Co. earned
Market Inc. owns 25% of Pearl Co. and has the ability to significantly influence the investee's operations and decision making. During 2018 Pearl Co. earned $750,000. In 2018 Pearl Co. sold $100,000 of inventory to Market, Inc., this inventory had a cost of $60,000 to Pearl Co. At December 31, 2018 $55,000 of the inventory remains unsold. Subsequently this inventory was sold off in January of 2019. During 2019 Pearl Co. earned $500,000. In 2015 Pearl Co. sold another $100,000 of inventory to Market, Inc., this inventory had a cost of $70,000 to Pearl Co. At December 31, 2019, $20,000 of the inventory remains unsold.
a. What amount of Equity in Investee Income would Market Inc. recognize from its ownership in Pearl Co. in 2018?
b. What amount of Equity in Investee Income would Market Inc. recognize from its ownership in Pearl Co. in 2019?
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