Question
On January 1, James Corporation purchased 30% of the common stock of Kostic Company for $500,000. The following information relates to Kostic at the date
On January 1, James Corporation purchased 30% of the common stock of Kostic Company for $500,000. The following information relates to Kostic at the date of acquisition.
| Cash | $ 50,000 |
| Accounts receivable (net) | 250,000 |
| Building (net) | 700,000 |
| Land | 100,000 |
| Liabilities | 100,000 |
Additional information relating to the purchase appears below.
James has the ability to exercise significant influence over Kostic and did not elect the fair value option.
Both the carrying amount and the fair value are the same for receivables, land, and liabilities.
The fair value of the building is $900,000.
James depreciates its assets on a straight-line basis. Both tangible and intangible assets are amortized over 10 years.
For the current year, Kostic had net income of $400,000 and declared and paid dividends of $100,000.
| The amount of equity method goodwill related to James acquisition of Kostic at January 1 was | $ |
| How much income from the Kostic investment should James income statement report? | $ |
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