A. 80% of Stechno's income plus 100% of the unrealized profit in Phast's ending inventory B. 80% of Stechno's income less 80% of the unrealized profit in Phast's ending inventory C. 80% of Stechno's income plus 80% of the unre
A. 80% of Stechno's income plus 100% of the unrealized profit in Phast's ending inventory B. 80% of Stechno's income less 80% of the unrealized profit in Phast's ending inventory C. 80% of Stechno's income plus 80% of the unre
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Phast Corporation owns a 80% interest in Stechno Company, acquired several years ago at a cost equal to book value and fair value. Stechno sells merchandise to Phast for the first time in 2014, and some is unsold at December 31, 2014. In computing income from the investee for 2014 under the equity method, Phast uses which equation?
A. |
80% of Stechno's income plus 100% of the unrealized profit in Phast's ending inventory |
|
B. |
80% of Stechno's income less 80% of the unrealized profit in Phast's ending inventory |
|
C. |
80% of Stechno's income plus 80% of the unrealized profit in Phast's ending inventory |
|
D. |
80% of Stechno's income less 100% of the unrealized profit in Phast's ending inventory |
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