Eagle Company acquires 25% of the voting stock of Frank Corporation for $4,000,000 on January 1, 2010.
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Question:
Eagle Company acquires 25% of the voting stock of Frank Corporation for $4,000,000 on January 1, 2010.At the time, the book value of the company was $16,000,000.During 2010Frank reported net income of $1,500,000 and paid dividends of $200,000.Both companies have December 31 year-ends.
Now assume Frank’s book value at the date of acquisition was $10,000,000, and the excess paid over book value is attributed to previously unrecorded intangibles with an estimated remaining life of 10 years. Straight-line amortization is appropriate. What amount will Eagle report as equity in net income of Frank for 2010?
Related Book For
Advanced Accounting
ISBN: 978-1934319307
2nd edition
Authors: Susan S. Hamlen, Ronald J. Huefner, James A. Largay III
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