Puff Co. acquired 40% of Straw Inc.'s voting common stock on January 2, Year 1 for $400,000. The carrying amount of Straw's net assets at the purchase date totaled $900,000. Fair value equaled carrying amounts for all items except equipment, for which fair values exceeded carrying amounts by $100,000. The equipment has a 5 year life. During year 1, Straw reported net income of $150,000. What amount of income from this investment should Puff report in its Year 1 Income Statement?<\/p>
Can you please explain this question step-by-step as well as the use of the equity method please (give an example). thanks.<\/p>", "transcribed_text": "", "related_book": { "title": "Financial Accounting Information For Decisions", "isbn": "9780324313413, 324672705, 324313411, 978-0324672701", "edition": "6th Edition", "authors": "Robert w Ingram, Thomas L Albright", "cover_image": "https:\/\/dsd5zvtm8ll6.cloudfront.net\/si.question.images\/book_images\/157.jpg", "uri": "\/textbooks\/financial-accounting-information-for-decisions-6th-edition-157", "see_more_uri": "" }, "free_related_book": { "isbn": "8269267155", "uri": "\/textbooks\/beat-stress-fatigue-and-burnout-take-immediate-actions-re-evaluate-your-life-and-build-a-platform-of-resilience-1st-edition-978-8269267150-361743", "name": "Beat Stress Fatigue And Burnout Take Immediate Actions Re Evaluate Your Life And Build A Platform Of Resilience", "edition": "1st Edition" }, "question_posted": "2024-06-16 21:35:38", "see_more_questions_link": "\/study-help\/questions\/business-banking-2021-September-12", "step_by_step_answer": "The Answer is in the image, click to view ...", "students_also_viewed": [ { "url": "\/946-carotene-yellow-food-coloring-agent-and-dietary-source-of", "description": "?-Carotene a yellow food-coloring agent and dietary source of vitamin A, can be prepared by a double Witting reaction between 2 equivalents of ?-ionylideneacetaldehyde and a diylide. 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O A. 1.70 O B. - 174 O C. -1.76 OD. -175", "stars": 3 } ], "next_back_navigation": { "previous": "\/study-help\/questions\/2-find-the-exact-value-of-sina-b-if-3164114", "next": "\/study-help\/questions\/please-solve-use-synthetic-division-to-find-pk-k-3164116" }, "breadcrumbs": [ { "name": "Study help", "link": "https:\/\/www.solutioninn.com\/study-help\/questions-and-answers" }, { "name": "Business", "link": "https:\/\/www.solutioninn.com\/study-help\/questions-and-answers\/business" }, { "name": "Accounting", "link": "https:\/\/www.solutioninn.com\/study-help\/questions\/business-accounting" }, { "name": "Puff Co. acquired 40% of Straw Inc.'s voting common stock on January", "link": "https:\/\/www.solutioninn.com\/study-help\/questions\/puff-co-acquired-40-of-straw-incs-voting-common-stock-3164115" } ], "skill_details": { "skill_id": "9", "skill_name": "Accounting", "parent_id": "1" } } }