Question
Pine Company owns 40 percent (140,000 shares) of Seacrest, Inc., which it purchased several years ago for $644,000. Since the date of acquisition, the equity
Pine Company owns 40 percent (140,000 shares) of Seacrest, Inc., which it purchased several years ago for $644,000. Since the date of acquisition, the equity method has been properly applied, and the carrying amount of the investment account as of January 1, 2015, is $875,000. Excess patent cost amortization of $42,000 is still being recognized each year. During 2015, Seacrest reports net income of $942,000 and a $420,000 other comprehensive loss, both incurred uniformly throughout the year. No dividends were paid during the year. Pine sold 28,000 shares of Seacrest on August 1, 2015, for $223,454 in cash. However, Pine retains the ability to significantly influence the investee. |
During the last quarter of 2014, Pine sold $75,000 in inventory (which it had originally purchased for only $45,000) to Seacrest. At the end of that fiscal year, Seacrests inventory retained $12,300 (at sales price) of this merchandise, which was subsequently sold in the first quarter of 2015. |
On Pines financial statements for the year ended December 31, 2015, what income effects would be reported from its ownership in Seacrest? (Round your answers to the nearest whole dollar.) |
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