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How much does Pell record as Income from Demers for the year ended December 31, 2020?

How much does Pell record as Income from Demers for the year ended December 31, 2020?

FINANCIAL ACCOUNTING
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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Pell 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 $100,000 Net income Dividends 40,000 Multiple Choice O $90,400. Assume the partial equity method is applied. How much does Pell record as Income from Demers for the year ended December 31, 2020? $89,000. $50,400. 2021 2020 $120,000 $120,000 $130,000 $96,000. 50,000 60,000
Transcribed Image Text:Pell 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 $100,000 Net income Dividends 40,000 Multiple Choice O $90,400. Assume the partial equity method is applied. How much does Pell record as Income from Demers for the year ended December 31, 2020? $89,000. $50,400. 2021 2020 $120,000 $120,000 $130,000 $96,000. 50,000 60,000
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