On January 1, 2018, Pohang Company acquired all of Suro Corporation's voting common stock for $1,500,000....

 

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On January 1, 2018, Pohang Company acquired all of Suro Corporation's voting common stock for $1,500,000. The $1,200,000 excess of acquisition cost over book value of Suro was attributed entirely to goodwill. Suro reported net income of $25,000 and $45,000 in 2018 and 2019, respectively, and paid out 40 percent of each year's earnings in dividends. Pohang reports its investment using the complete equity method. There is no goodwill impairment in 2018 or 2019. Information on intercompany transactions follows: 1. On March 5, 2018, Suro sold land to Pohang for $60,000; the land originally cost $55,000. Pohang continues to hold the land. 2. During 2019, Pohang recorded intercompany merchandise sales of $300,000 to Suro, reflecting a markup of 25 percent on cost. Suro's begnning inventory included $10,000 of merchandise purchased from Pohang. Suro's ending inventory included $15,000 of merchandise purchased from Pohang 3. On January 1, 2019, Suro sold machinery to Pohang for $25.000 and recorded a gain of $5,000. The machinery is being depreciated over its remaining life of five years. straight-line. 4. Pohang billed Suro $20,000 for services during 2019. Costs incurred in supplying these services amounted to $16,000, On December 31, 2019, the unpaid portion of these intercompany services amounted to $1,000. Required agrepare a schedule to compute Pohang's equity in net income of Suro for 2019. Use negative signs with answers that reduce the net income amount. 45,000 2.000 3.000) Suro's net income Intercompany profits in Suro's beginning inventory Intercompany prohts in Suro's ending inventory Unconfirmed gain on intercompany sale of machinery (4,000) 40,000 Equity in net income On January 1, 2018, Pohang Company acquired all of Suro Corporation's voting common stock for $1,500,000. The $1,200,000 excess of acquisition cost over book value of Suro was attributed entirely to goodwill. Suro reported net income of $25,000 and $45,000 in 2018 and 2019, respectively, and paid out 40 percent of each year's earnings in dividends. Pohang reports its investment using the complete equity method. There is no goodwill impairment in 2018 or 2019. Information on intercompany transactions follows: 1. On March 5, 2018, Suro sold land to Pohang for $60,000; the land originally cost $55,000. Pohang continues to hold the land. 2. During 2019, Pohang recorded intercompany merchandise sales of $300,000 to Suro, reflecting a markup of 25 percent on cost. Suro's begnning inventory included $10,000 of merchandise purchased from Pohang. Suro's ending inventory included $15,000 of merchandise purchased from Pohang 3. On January 1, 2019, Suro sold machinery to Pohang for $25.000 and recorded a gain of $5,000. The machinery is being depreciated over its remaining life of five years. straight-line. 4. Pohang billed Suro $20,000 for services during 2019. Costs incurred in supplying these services amounted to $16,000, On December 31, 2019, the unpaid portion of these intercompany services amounted to $1,000. Required agrepare a schedule to compute Pohang's equity in net income of Suro for 2019. Use negative signs with answers that reduce the net income amount. 45,000 2.000 3.000) Suro's net income Intercompany profits in Suro's beginning inventory Intercompany prohts in Suro's ending inventory Unconfirmed gain on intercompany sale of machinery (4,000) 40,000 Equity in net income

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