On January 2, 2010, Slurg Corporation paid $600,000 to acquire 20% interest in Padwaddy Inc. At that time, the book value of Padwaddy stockholders' equity included $700,000 of common stock and $1,800,000 of retained earnings. All the excess purchase cost over the book value acquired was attributable to a patent with an estimated life of 10 years. Padwaddy paid $6,250 dividends each quarter for the next two years, and reported net income of $150.000 for 2010 and $220.000 for 2011. Slurg recorded all activities related to their investment using the equity method.

Required 

1. Calculate Slurg's income from Padwaddy for 2010. 

2 Calculate Slurg's income from Padwaddy for 2011 

3. Determine the balance of Slurg's Investment in Padwaddy account on December 31, 2011.

Answer rating: 100% (QA)

Excess cost over book value acquired Cost of slurgs 20 invest in Padwaddy Less ... View the full answer