Question: Investor Limited owns 35 of Machines Limited and has significant
Investor Limited owns 35% of Machines Limited and has significant influence. The investment was made five years ago, when Machine’s fair values equaled book values; $ 40,000 of goodwill was inherent in the purchase price. Goodwill is not impaired. In the current fiscal year, Machines reported $ 225,000 in income. This includes a $ 50,000 profit on inventory sold to Investor Limited, which Investor has not yet resold. How much investment revenue will Investor report using the equity method?
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