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Need help with this problem. Satori Inc. acquired all of the outstanding common stock of Zen Corp. on January 1, 2017, for $545,000. Equipment with
Need help with this problem.
Satori Inc. acquired all of the outstanding common stock of Zen Corp. on January 1, 2017, for $545,000. Equipment with a two-year life and building with a ten-year life were undervalued on Zen's financial records by $34,000 and $110,000, respectively. Zen also owned an unrecorded customer list with an assessed fair value of $60,000 and an estimated remaining life of five years. Zen earned reported net income of $181,000 in 2017 and $215,000 in 2018. Dividends of $65,000 were paid in each of these two years. Selected account balances as of December 31, 2019, for the two companies follow. Satori Inc. Zen Corp. Revenues 1,106,000 812,000 Expenses 769,000 625,000 Investment income Not given 0 Retained earnings, 01.01.19 840,000 600,000 Dividends paid 132,000 94,000 a.) If the partial equity method had been applied, what was 2019 consolidated net income? [5 points] b.) If the equity method had been applied, what would be the Investment in Zen account balance be at 12.31.2019? (5 points)Step by Step Solution
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