BuyCo, Incorporated, holds $25$ percent of the outstanding shares of Marqueen company and appropriately applies the equity method of accounting. Excess cost amortization $($related to a patent$)$ associated with this investment amounts to $$10,000$ per year. For $2023,$ Marqueen reported earnings of $$100,000$ and declares cash dividends of $$30,000.$ During that year, Marqueen acquired inventory for $$50,000,$ which it then sold to BuyCo for $$80,000.$ At the end of $2023,$ BuyCo continued to hold merchandise with a transfer price of $$32,000.$

Required:

What Equity in Investee Income should BuyCo report for $2023?$

How will the intra$-$entity transfer affect BuyCo's reporting in $2024?$

If BuyCo had sold the inventory to Marqueen, would your answers to parts $($a$)$ and $($b$)$ change?

Answer rating: 100% (QA)

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