How is the unrealized gross profit on intra-entity sales calculated? What effect does an unrealized gross profit have on the recording of an investment if the equity method is applied?
Answer to relevant Questions(Multiple Choice)1. When an investor uses the equity method to account for investments in common stock, cash dividends received by the investor from the investee should be recorded asa. A deduction from the investor’s ...Panner, Inc., owns 30 percent of Watkins and applies the equity method. During the current year, Panner buys inventory costing $54,000 and then sells it to Watkins for $90,000. At the end of the year, Watkins still holds ...Hager holds 30 percent of the outstanding shares of Jenkins and appropriately applies the equity method of accounting. Excess cost amortization (related to a patent) associated with this investment amounts to $9,000 per ...Hobson acquires 40 percent of the outstanding voting stock of Stokes Company on January 1, 2010, for $210,000 in cash. The book value of Stokes's net assets on that date was $400,000, although one of the company's buildings, ...On January 1, Intergen, Inc., invests $200,000 for a 40 percent interest in Ryan, a new joint venture with two other partners each investing $150,000 for 30 percent interests. Intergen plans to sell all of its production to ...
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