Quill Corporation acquired 70 percent of North Companys stock on January 1, 20X9, for $105,000. At that
Question:
Quill and North reported 20X9 operating incomes of $90,000 and $35,000 and dividend payments of $30,000 and $10,000, respectively.
Required
a. Compute the amount reported as net income by each company for 20X9, assuming Quill uses equity-method accounting for its investment in North.
b. Compute consolidated net income for 20X9.
c. Compute the reported balance in retained earnings at December 31, 20X9, for both companies.
d. Compute consolidated retained earnings at December 31, 20X9.
e. How would the computation of consolidated retained earnings at December 31, 20X9, change if Quill uses the cost method in accounting for its investment inNorth?
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...
Step by Step Answer:
Advanced Financial Accounting
ISBN: 978-0078025624
10th edition
Authors: Theodore E. Christensen, David M. Cottrell, Richard E. Baker