Question
On Jan. 1, 2017, Bar Corporation Acquired 70% of Hunter's Company stock for $550,000. On the Acquisition date, Hunter reported net assets off $800,000 value
On Jan. 1, 2017, Bar Corporation Acquired 70% of Hunter's Company stock for $550,000. On the Acquisition date, Hunter reported net assets off $800,000 value at historical cost. All of Hunter Company's assets and liabilities had book value equal to fair market value except Buildings that had a fair value $200,000 greater than book value. This excess over book on the buildings had a 10 year remaining life.
During 2017, Hunter reported net income of $40,000 and paid dividends of $25,000. In 2018, reported net income of $15,000 and paid dividends of $35,000 and in 2019 reported net income of $30,000 and paid dividends of $20,000.
A) How much investment income would Bar Company report in 2018 under the equity method?
B) What is the investment account balance on Bar Company's books for its investment in Hunter corporation as of 12/31/19 under the equity method
C) How much investment income would Bar Company Report in each year from its investment in Hunter under the Cost Method?
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