Equity Method Accounting, Second Year Palmetto Corporation acquired all of the voting stock of Steadman Company on January 2, 2021, by issuing stock with a fair value of $22,400,000 Steadman's book value was $7,000,000 at the date of acquisition, and its net assets were reported at amounts approximating fair value. However, Palmetto determined that Steadman had previously unreported identifiable intangibles with a fair value of $1,400,000 with a 4-year life. Steadman reported net income of $1,260,000 in 2021 and $1,750,000 in 2022 and declared and paid no dividends. There was no goodwill impairment in 2021, but impairment in 2022 was $560,000. Palmetto uses the compete equity method to report its investment in Steadman on its own books. Required a Calculate equity in net income for 2022, reported on Palmetto's books 0 b. Calculate the December 31, 2022, investment balance, reported on Palmette's books

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Chapter1: Financial Statements And Business Decisions
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Equity Method Accounting, Second Year
Palmetto Corporation acquired all of the voting stock of Steadman Company on January 2, 2021, by issuing stock with a fair value of $22,400,000. Steadman's book value was $7,000,000 at the date of
acquisition, and its net assets were reported at amounts approximating fair value. However, Palmetto determined that Steadman had previously unreported identifiable intangibles with a fair value of
$1,400,000 with a 4-year life. Steadman reported net income of $1,260,000 in 2021 and $1,750,000 in 2022 and declared and paid no dividends. There was no goodwill impairment in 2021, but impairment in
2022 was $560,000. Palmetto uses the compete equity method to report its investment in Steadman on its own books.
Required
a. Calculate equity in net income for 2022, reported on Palmetto's books.
0
b. Calculate the December 31, 2022, investment balance, reported on Palmetto's books
0
Transcribed Image Text:Equity Method Accounting, Second Year Palmetto Corporation acquired all of the voting stock of Steadman Company on January 2, 2021, by issuing stock with a fair value of $22,400,000. Steadman's book value was $7,000,000 at the date of acquisition, and its net assets were reported at amounts approximating fair value. However, Palmetto determined that Steadman had previously unreported identifiable intangibles with a fair value of $1,400,000 with a 4-year life. Steadman reported net income of $1,260,000 in 2021 and $1,750,000 in 2022 and declared and paid no dividends. There was no goodwill impairment in 2021, but impairment in 2022 was $560,000. Palmetto uses the compete equity method to report its investment in Steadman on its own books. Required a. Calculate equity in net income for 2022, reported on Palmetto's books. 0 b. Calculate the December 31, 2022, investment balance, reported on Palmetto's books 0
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