Question
Potter Company acquires 40% of the voting stock of Stanton Corporation for $8,000,000 on January 1, 2016. At the time, the book value of Stanton
Potter Company acquires 40% of the voting stock of Stanton Corporation for $8,000,000 on January 1, 2016. At the time, the book value of Stanton was$15,000,000, and the excess paid over book value is attributed to previously unrecorded intangibles with an estimated remaining life of 10 years. Straight-line amortization is appropriate.During 2016, Stanton reported net income of $2,500,000 and paid dividends of $600,000. Both companies have December 31 year-ends, and there is no impairment of the investment.
What amount does Potter report as equity in net income of Stanton for2016?
a.$ 560,000
b.$2,000,000
c.$ 800,000
d.$1,000,000
Potter Company acquires 40% of the voting stock of Stanton Corporation for $8,000,000 on January 1, 2016. At the time, the book value of Stanton was$15,000,000, and the excess paid over book value is attributed to previously unrecorded intangibles with an estimated remaining life of 10 years. Straight-line amortization is appropriate.During 2016, Stanton reported net income of $2,500,000 and paid dividends of $600,000. Both companies have December 31 year-ends, and there is no impairment of the investment.
What amount does Potter report as equity in net income of Stanton for2016?
a.$ 560,000
b.$2,000,000
c.$ 800,000
d.$1,000,000
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Bookkeeping Fundamentals A Beginners Guide To Basic Bookkeeping And Accounting For Business
Authors: Tim Power
1st Edition
1801490058, 978-1801490054
