BuyCo, Inc. holds 22 percent of the outstanding shares of Marqueen company and appropriately applies the...

50.1K

Verified Solution

Question

Accounting

BuyCo, Inc. holds 22 percent of the outstanding shares ofMarqueen company and appropriately applies the equity method ofaccounting. Excess cost amortization (related to a patent)associated with this investment amounts to $11,700 per year. For2017, Marqueen reported earnings of $116,000 and declares cashdividends of $34,000. During that year, Marqueen acquired inventoryfor $45,000, which it then sold to BuyCo for $90,000. At the end of2017, BuyCo continued to hold merchandise with a transfer price of$26,000.
What Equity in Investee Income should BuyCo report for 2017?
How will the intra-entity transfer affect BuyCo's reporting in2018?
If BuyCo had sold the inventory to Marqueen, how would theanswers to (a) and (b) have changed?
a. Equity in investee income
b. Equity accrual for 2018 will be Yes or No Â Â
c. If the inventory was sold,would your answers above change? Yes or No

Answer & Explanation Solved by verified expert

3.6 Ratings (474 Votes)

Ans a Equity in investee income 10960 b Equity accrual for 2018 will be Yes increased by 2860 c If the inventory was sold would your answer above change No CalculationFeedback a Equity in investee See Answer

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:

Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!

Become a Member