Alex, Incorporated, buys 30 percent of Steinbart Company on January 1, 2023, for $1,098,000. The equity method of accounting is to be used. Steinbart'snet assets on that date were $3.30 million. Any excess of cost over book value is attributable to a trade name with a 20-year remaining life. Steinbartimmediately begins supplying inventory to Alex as follows:Amount Held byAlex at Year-End(at transferprice)$ 55,00055,000Inventory held at the end of one year by Alex is sold at the beginning of the next.Steinbart reports net income of $100,000 in 2023 and $130,900 in 2024 and declares $40,000 in dividends each year. What is the equity income inSteinbart to be reported by Alex in 2024?Year Cost to Steinbart Transfer Price20232024$ 156,200109,800$ 220,000180,000

Alex, Incorporated, buys 30 percent of Steinbart Company on January 1, 2023, for $1,098,000. The equity method of accounting is to be used. Steinbart's net assets on that date were $3.30 million. Any excess of cost over book value is attributable to a trade name with a 20-year remaining life. Steinbart immediately begins supplying inventory to Alex as follows: Year Cost to Steinbart Transfer Price 2023 2024 $ 156,200 109,800 $ 220,000 180,000 Amount Held by Alex at Year-End (at transfer price) $ 55,000 55,000

Alex, Incorporated, buys 30 percent of Steinbart Company on January 1, 2023, for $1,098,000. The equity method of accounting is to be used. Steinbart's net assets on that date were $3.30 million. Any excess of cost over book value is attributable to a trade name with a 20-year remaining life. Steinbart immediately begins supplying inventory to Alex as follows: Year Cost to Steinbart Transfer Price 2023 2024 $ 156,200 109,800 $ 220,000 180,000 Amount Held by Alex at Year-End (at transfer price) $ 55,000 55,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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