On April 1, 2016, Mumford Company sold equipment to its wholly owned subsidiary, Stapp Corporation, for $306,000.
Question:
On April 1, 2016, Mumford Company sold equipment to its wholly owned subsidiary, Stapp Corporation, for $306,000. At the time of the transfer, the asset had an original cost (to Mumford) of $350,000 and accumulated depreciation of $110,000. The equipment has a ten-year estimated remaining life.
Stapp reported net income of $500,000, $580,000 and $620,000 in 2016, 2017, and 2018, respectively. Mumford received dividends from Stapp of $180,000, $210,000 and $240,000 for 2016, 2017, and 2018, respectively.
Assume Mumford uses the equity method to account for its investment in Stapp. What is the balance in the pre-consolidation Income (loss) from Subsidiary account for 2016?
Advanced Accounting
ISBN: 978-0134472140
13th edition
Authors: Floyd A. Beams, Joseph H. Anthony, Bruce Bettinghaus, Kenneth Smith