47Problem 1-25 (Algo) (LO 1-4, 1-5, 1-7)Matthew, Inc., owns 30 percent of the outstanding stock of Lindman Company and has the ability to significantly influence theinvestee's operations and decision making. On January 1, 2021, the balance in the Investment in Lindman account is $372,000Amortization of excess fair value associated with the 30% ownership is $11,700 per year. In 2021, Lindman earns an incomeof $106,500 and declares cash dividends of $35,500. Previously, in 2020, Lindman had sold inventory costing $47,600 to Matthew for$68,000. Matthew consumed all but 25 percent of this merchandise during 2020 and used the rest during 2021. Lindman soldadditional inventory costing $59,400 to Matthew for $90,000 in 2021. Matthew did not consume 40 percent of these 2021 purchasesfrom Lindman until 2022.a. What amount of equity method income would Matthew recognize in 2021 from its ownership interest in Lindman?b. What is the equity method balance in the Investment in Lindman account at the end of 2021?aEquity incomebBalance of investment in Lindman account

To answer this problem, we need to calculate the equity method income for Matthew, Inc. and the…

Answered: 47 Problem 1-25 (Algo) (LO 1-4, 1-5,…

Cornerstones of Financial Accounting

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ChapterA2: Investments

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Problem 23E

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