Compute the Equity in Q-Video's earnings for both 2018 and 2019; as well as the ending balance in the Investment Account as of December 31, 2019. It may be helpful to prepare the journal entries for each year.

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On January 1, 2018, Stream Company acquired 30% of the outstanding voting shares of Q-Video for $800,000. On that date, Q-Video reported assets and liabilities with book values of $2 million and $750,000, respectively. A customer list developed by Q-Video had an estimated fair value of $300,000, although it was not recorded on Q-Video's books. The expected useful life of this list was 5 years. Any excess remaining cost of Stream's investment over the underlying book value of Q-Video was attributable to Goodwill. Q-Video generated net income of $225,000 in 2018, but had a net loss of $120,000 in 2019. The company paid a $100,000 dividend in 2018, but paid no dividend in 2019 (due to the loss). Intra-entity upstream sales from Q-Video to Stream during the two years were as follows: 2018 2019 Cost to Q-Video $100,000 $140,000 Price to Stream $160,000 $175,000 Remaining in Inventory (At Transfer Price) $40,000 $25,000 On January 1, 2018, Stream Company acquired 30% of the outstanding voting shares of Q-Video for $800,000. On that date, Q-Video reported assets and liabilities with book values of $2 million and $750,000, respectively. A customer list developed by Q-Video had an estimated fair value of $300,000, although it was not recorded on Q-Video's books. The expected useful life of this list was 5 years. Any excess remaining cost of Stream's investment over the underlying book value of Q-Video was attributable to Goodwill. Q-Video generated net income of $225,000 in 2018, but had a net loss of $120,000 in 2019. The company paid a $100,000 dividend in 2018, but paid no dividend in 2019 (due to the loss). Intra-entity upstream sales from Q-Video to Stream during the two years were as follows: 2018 2019 Cost to Q-Video $100,000 $140,000 Price to Stream $160,000 $175,000 Remaining in Inventory (At Transfer Price) $40,000 $25,000

Answer rating: 100% (QA)

Equity in QVideos earnings for 2018 112500 Equity in QVideos earnings for 2019 60000 Ending balance ... View the full answer