Equity method journal entries with intercompany sales of inventory Assume that an investor owns 30% of an investee, and
Posted: Fri Jul 01, 2022 8:52 am
Equity method journal entries with intercompany sales ofinventoryAssume that an investor owns 30% of an investee, and accounts forits investment using the equity method. At the beginning of theyear, the Equity Investment was reported on the investor’s balancesheet at $400,000. During the year, the investee reported netincome of $100,000 and paid dividends of $60,000. In addition, theinvestor sold inventory to the investee, realizing a gross profitof $40,000 on the sale. At the end of the year, 15% of theinventory remained unsold by the investee.
a. How much equity income should the investor report for theyear?28200
b. What is the balance of the Equity Investment at theend of the year? ??? i dont know how to get this answer. THEANSWER IS NOT $368,200. i GOT IT WRONG!!!!
c. Assume that the inventories are all sold in the followingyear, that the investee reports $150,000 of net income. How muchequity income will the investor report for the followingyear? 46800
a. How much equity income should the investor report for theyear?28200
b. What is the balance of the Equity Investment at theend of the year? ??? i dont know how to get this answer. THEANSWER IS NOT $368,200. i GOT IT WRONG!!!!
c. Assume that the inventories are all sold in the followingyear, that the investee reports $150,000 of net income. How muchequity income will the investor report for the followingyear? 46800