United inc. bought 40% of Arjent Corp. 'S outstanding common stock on January 2, 2022, for $800,000.
Question:
United inc. bought 40% of Arjent Corp. 'S outstanding common stock on January 2, 2022, for $800,000. The book value of Arjent net assets at the purchase date totaled to $1,500,000 The fair value of Arjent net assets at the purchase date totaled $1,564,000. The difference is attributable to the undervalued buildings(60,000)and inventory (4,000). The building has a
remaining useful life of ten years with no residual value, Both companies use straight -line depreciation. All inventory was sold during 2022 During 2022 Ajent reported net income of
$100,000 and paid a $20,000 cash dividend. There is no impairment of goodwill during 2022. Assume that United In uses the equity method to scout far this investment. what
amount should United report in its income statement from its investment in Arjent for the year ended December 31, 2022?
O $20,000
O $36,000
O $22,200
O $32,000
show work please
Financial Reporting And Analysis
ISBN: 9781260247848
8th Edition
Authors: Lawrence Revsine, Daniel Collins, Bruce Johnson, Fred Mittelstaedt, Leonard Soffer