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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
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
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