Company R owns a 30% interest in Company E, which it acquires at book value. Company E reports net income of $50,000 for 2015 (ignore taxes). There is an intercompany sale of equipment at a gain of $20,000 on January 1, 2015. The equipment has a 5-year life. What is Company R’s investment income for 2015, and what adjusting entry (if any) does Company R need to make as a result of the equipment sale, if: a. Company E made the sale? b. Company R made the sale?
Company R owns a 30% interest in Company E, which it acquires at book value. Company E reports net income of $50,000 for 2015 (ignore taxes). There is an intercompany sale of equipment at a gain of $20,000 on January 1, 2015. The equipment has a 5-year life. What is Company R’s investment income for 2015, and what adjusting entry (if any) does Company R need to make as a result of the equipment sale, if: a. Company E made the sale? b. Company R made the sale?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Company R owns a 30% interest in Company E, which it acquires at book value. Company E reports net income of $50,000 for 2015 (ignore taxes). There is an intercompany sale of equipment at a gain of $20,000 on January 1, 2015. The equipment has a 5-year life. What is Company R’s investment income for 2015, and what
a. Company E made the sale?
b. Company R made the sale?
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