ell Company acquires 80% of Demers Company for $500,000 on January 1, 2019. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired. Demers earns income and pays dividends as follows: 2019 2020 2021 Net income $ 100,000 $ 120,000 $ 130,000 Dividends 40,000 50,000 60,000 Assume the equity method is applied. What is the consolidated balance of the Equity in Demers Earnings account at December 31, 2021. Multiple Choice $0. $98,400. $104,000. $97,000. $56,000.
ell Company acquires 80% of Demers Company for $500,000 on January 1, 2019. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired. Demers earns income and pays dividends as follows: 2019 2020 2021 Net income $ 100,000 $ 120,000 $ 130,000 Dividends 40,000 50,000 60,000 Assume the equity method is applied. What is the consolidated balance of the Equity in Demers Earnings account at December 31, 2021. Multiple Choice $0. $98,400. $104,000. $97,000. $56,000.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter12: Intangibles
Section: Chapter Questions
Problem 19E
Related questions
Question
Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2019. Demers reported common stock of $300,000 and
Demers earns income and pays dividends as follows:
2019 | 2020 | 2021 | |||||||||
Net income | $ | 100,000 | $ | 120,000 | $ | 130,000 | |||||
Dividends | 40,000 | 50,000 | 60,000 | ||||||||
Assume the equity method is applied.
What is the consolidated balance of the Equity in Demers Earnings account at December 31, 2021.
Multiple Choice
-
$0.
-
$98,400.
-
$104,000.
-
$97,000.
-
$56,000.
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