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Mitchell, Inc, owns 30 percent of the outstanding stock of Lucas Company and has the ability to significantly influence the investee's operations and decision making.
Mitchell, Inc, owns 30 percent of the outstanding stock of Lucas Company and has the ability to significantly influence the investee's operations and decision making. On January 1, 2021, the balance in the Investment in Lucas account is $341,000. Amortization of excess fair value associated with the 30% ownership is $17,400 per year. In 2021, Lucas earns an income of $159,000 and declares cash dividends of $53,000. Previously, in 2020, Lucas had sold inventory costing $47,200 to Mitchell for $59,000. Mitchell consumed all but $14,750 during 2020 and used the rest during 2021. Lucas sold additional inventory costing S60,000 to Mitchell for $80,000 in 2021. Mitchell did not consume $32,000 of these 2021 purchases from Lucas until 2022. What amount of equity method income would Mitchell recognize in 2021 from its ownership interest in Lucas? Choices: $30,300 $27,900 $28,785 $27,015
Mitchell, Inc, owns 30 percent of the outstanding stock of Lucas Company and has the ability to significantly influence the investee's operations and decision making. On January 1, 2021, the balance in the Investment in Lucas account is $341,000. Amortization of excess fair value associated with the 30% ownership is $17,400 per year.
Choices:
$30,300
$27,900
$28,785
$27,015
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