Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Pearl Corporation paid $150,000 on January 1, 2013 for a 25% interest in Sandlin Inc. On January 1, 2013, the book value of Sandlin's stockholders'

Pearl Corporation paid $150,000 on January 1, 2013 for a 25% interest in Sandlin Inc. On January 1, 2013, the book value of Sandlin's stockholders' equity consisted of $200,000 of common stock and $200,000 of retained earnings. All the excess purchase cost over book value acquired was attributable to a patent with an estimated life of 5 years. During 2013 and 2014, Sandlin paid $3,000 of dividends each quarter and reported net income of $60,000 for 2013 and $80,000 for 2014. Pearl used the equity method.

Required:

  1. 1.Calculate Pearl's income from Sandlin for 2013.
  2. 2.Calculate Pearl's income from Sandlin for 2014.
  3. 3. Determine the balance of Pearl's Investment in Sandlin account on December 31, 2014.

Step by Step Solution

3.52 Rating (149 Votes )

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

1st edition

1111822360, 978-1337116619, 1337116610, 978-1111822378, 1111822379, 978-1111822361

More Books

Students also viewed these Accounting questions

Question

What are your options besides a rote memory approach?

Answered: 1 week ago