Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

On January 1, 2017, Stream Company acquired 29 percent of the outstanding voting shares of Q-Video, Inc., . for $680,000. Q-Video manufactures specialty cables for

image text in transcribed

On January 1, 2017, Stream Company acquired 29 percent of the outstanding voting shares of Q-Video, Inc., . for $680,000. Q-Video manufactures specialty cables for computer monitors. On that date, Q-Video reported assets and liabilities with book values of $2.6 million and $634,000, respectively. A customer list compiled by Q-Video had an appraised value of $262,000, although it was not recorded on its books. The expected remaining life of the customer list was five years with a straight-line amortization deemed appropriate. Any remaining excess cost was not identifiable with any particular asset and thus was considered goodwill. Q-Video generated net income of $298,000 in 2017 and a net loss of $102,000 in 2018. In each of these two years, Q-Video declared and paid a cash dividend of $12,000 to its stockholders. During 2017, Q-Video sold inventory that had an original cost of $88,000 to Stream for $160,000. Of this balance, $80,000 was resold to outsiders during 2017, and the remainder was sold during 2018. In 2018, Q-Video sold inventory to Stream for $176,000. This inventory had cost only $132,000. Stream resold $108,000 of the inventory during 2018 and the rest during 2019. For 2017 and then for 2018, compute the amount that Stream should report as income from its investment in Q-Video in its external financial statements under the equity method. (Enter your answers in whole dollars and not in millions. Do not round intermediate calculations.) 2017 Equity income of 2018 Equity loss of

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

Becker CPA Exam Final Review Auditing

Authors: Becker

1st Edition

1943628521, 978-1943628520

More Books

Students also viewed these Accounting questions

Question

How does the concept of hegemony relate to culture?

Answered: 1 week ago

Question

Identify cultural barriers to communication.

Answered: 1 week ago