Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Matthew, Incorporated, owns 30 percent of the outstanding stock of Lindman Company and has the ability to significantly influence the investees operations and decision making.

Matthew, Incorporated, owns 30 percent of the outstanding stock of Lindman Company and has the ability to significantly influence the investees operations and decision making. On January 1, 2024, the balance in the Investment in Lindman account is $385,000. Amortization associated with this acquisition is $17,500 per year. In 2024, Lindman earns an income of $115,500 and declares cash dividends of $38,500. Previously, in 2023, Lindman had sold inventory costing $32,800 to Matthew for $41,000. Matthew consumed all but 30 percent of this merchandise during 2023 and used the rest during 2024. Lindman sold additional inventory costing $45,600 to Matthew for $60,000 in 2024. Matthew did not consume 40 percent of these 2024 purchases from Lindman until 2025.

image text in transcribed

Please show Calculations, Thanks in advance

Matthew, Incorporated, owns 30 percent of the outstanding stock of Lindman Company and has the ability to significantly influence the investee's operations and decision making. On January 1, 2024, the balance in the Investment in Lindman account is $385,000. Amortization associated with this acquisition is $17,500 per year. In 2024 , Lindman earns an income of $115,500 and declares cash dividends of $38,500. Previously, in 2023 , Lindman had sold inventory costing $32,800 to Matthew for $41,000. Matthew consumed all but 30 percent of this merchandise during 2023 and used the rest during 2024. Lindman sold additional inventory costing $45,600 to Matthew for $60,000 in 2024 . Matthew did not consume 40 percent of these 2024 purchases from Lindman until 2025. Required: a. What amount of equity method income would Matthew recognize in 2024 from its ownership interest in Lindman? b. What is the equity method balance in the Investment in Lindman account at the end of 2024

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Money Laundering Prevention Deterring Detecting And Resolving Financial Fraud

Authors: Jonathan E. Turner

1st Edition

0470874759, 978-0470874752

More Books

Students also viewed these Accounting questions

Question

Ensure continued excellence in people management.

Answered: 1 week ago

Question

Enhance the international team by recruiting the best people.

Answered: 1 week ago