Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

On January 1, 2020, Stream Company acquired 20 percent of the outstanding voting shares of Q-Video, Inc., for $774,000. Q-Video manufactures specialty cables for

image text in transcribed

On January 1, 2020, Stream Company acquired 20 percent of the outstanding voting shares of Q-Video, Inc., for $774,000. Q-Video manufactures specialty cables for computer monitors. On that date, Q-Video reported assets and liabilities with book values of $2.2 million and $658,000, respectively. A customer list compiled by Q-Video had an appraised value of $360,000, although it was not recorded on its books. The expected remaining life of the customer list was five years with 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 $316,000 in 2020 and a net loss of $130,000 in 2021. In each of these two years, Q-Video declared and paid a cash dividend of $18,000 to its stockholders. During 2020, Q-Video sold inventory that had an original cost of $84,000 to Stream for $150,000. Of this balance, $75,000 was resold to outsiders during 2020, and the remainder was sold during 2021. In 2021, Q-Video sold inventory to Stream for $170,000. This inventory had cost only $136,000. Stream resold $108,000 of the inventory during 2021 and the rest during 2022. For 2020 and then for 2021, 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.) 2020 2021 of 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

Step: 3

blur-text-image

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

Intermediate Accounting Reporting and Analysis

Authors: James M. Wahlen, Jefferson P. Jones, Donald Pagach

2nd edition

9781305727557, 1285453824, 9781337116619, 130572755X, 978-1285453828

More Books

Students also viewed these Accounting questions

Question

How flying airoplane?

Answered: 1 week ago

Question

Identify the most stable compound:

Answered: 1 week ago

Question

Review the varieties of selection interview and its purpose? LO1

Answered: 1 week ago

Question

What were the ritual features?? LO1

Answered: 1 week ago