Matthew, Inc. owns 30 percent of the outstanding stock of Lindman Company and has the ability to significantly influence theinvestee's operations and decision making. On January 1, 2018, the balance in the Investment in Lindman account is $422,000.Amortization associated with this acquisition is $15.000 per year. In 2018, Lindman earns an income of $138,000 and declares cashdividends of $46,000. Previously, in 2017, Lindman had sold inventory costing $35,000 to Matthew for $50,000. Matthew consumed allIbut 25 percent of this merchandise during 2017 and used the rest during 2018. Lindman sold additional inventory costing $42,900 toMatthew for $65,000 in 2018. Matthew did not consume 40 percent of these 2018 purchases from Lindman until 2019.a. What amount of equity method income would Matthew recognize in 2018 from its ownership interest in Lindman?b. What is the equity method balance in the Investment in Lindman account at the end of 2018?a.Equity incomeb.Investment in Lindman account

Gross profit rate=Sales price-CostSales price×100

Matthew, Inc. owns 30 percent of the outstanding stock of Lindman Company and has the ability to significantly influence the investee's operations and decision making. On January 1, 2018, the balance in the Investment in Lindman account is $422,000. Amortization associated with this acquisition is $15,000 per year. In 2018, Lindman earns an income of $138,000 and declares cash dividends of $46,000. Previously, in 2017, Lindman had sold inventory costing $35,000 to Matthew for $50,000. Matthew consumed all but 25 percent of this merchandise during 2017 and used the rest during 2018. Lindman sold additional inventory costing $42,900 to Matthew for $65,000 in 2018. Matthew did not consume 40 percent of these 2018 purchases from Lindman until 2019. a. What amount of equity method income would Matthew recognize in 2018 from its ownership interest in Lindman? b. What is the equity method balance in the Investment in Lindman account at the end of 2018? a. Equity income b. Investment in Lindman account

Matthew, Inc. owns 30 percent of the outstanding stock of Lindman Company and has the ability to significantly influence the investee's operations and decision making. On January 1, 2018, the balance in the Investment in Lindman account is $422,000. Amortization associated with this acquisition is $15,000 per year. In 2018, Lindman earns an income of $138,000 and declares cash dividends of $46,000. Previously, in 2017, Lindman had sold inventory costing $35,000 to Matthew for $50,000. Matthew consumed all but 25 percent of this merchandise during 2017 and used the rest during 2018. Lindman sold additional inventory costing $42,900 to Matthew for $65,000 in 2018. Matthew did not consume 40 percent of these 2018 purchases from Lindman until 2019. a. What amount of equity method income would Matthew recognize in 2018 from its ownership interest in Lindman? b. What is the equity method balance in the Investment in Lindman account at the end of 2018? a. Equity income b. Investment in Lindman account

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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On May 1, 2020, Clarke Inc. acquired 1,250 shares of Mayson Ltd. for $75,000. This investment represents a 16% interest in Mayson Ltd. and Clark Inc. has significant influence. On December 31, 2020, Mayon Ltd. paid a $35,000 dividend to its shareholders. At April 30, 2021 Mayson Ltd.'s shares were valued at $30 per share and Mayson Ltd. reported net income of $27,000 for the year. On June 15, 2021, Clarke Inc. sold the shares for $37,000. Both Clarke Inc. and Mayson Ltd. have April 30, 2021 year-ends. Prepare dated journal entries for the investment on the acquiring company's books and from acquisition to disposal. Ignore income taxes. Journal entry descriptions are optional.
Matthew, Inc., owns 30 percent of the outstanding stock of Lindman Company and has the ability to significantly influence the investee’s operations and decision making. On January 1, 2021, the balance in the Investment in Lindman account is $341,000. Amortization of excess fair value associated with the 30% ownership is $17,400 per year. In 2021, Lindman earns an income of $159,000 and declares cash dividends of $53,000. Previously, in 2020, Lindman had sold inventory costing $47,200 to Matthew for $59,000. Matthew consumed all but 25 percent of this merchandise during 2020 and used the rest during 2021. Lindman sold additional inventory costing $60,800 to Matthew for $80,000 in 2021. Matthew did not consume 40 percent of these 2021 purchases from Lindman until 2022. What amount of equity method income would Matthew recognize in 2021 from its ownership interest in Lindman? What is the equity method balance in the Investment in Lindman account at the end of 2021?
Please include each step of calculation for my reference. Thanks a lot.
Matthew, Inc., owns 30 percent of the outstanding stock of Lindman Company and has the ability to significantly influence the investee's operations and decision making. On January 1, 2021, the balance in the Investment in Lindman account is $422,000. Amortization of excess fair value associated with the 30% ownership is $15,000 per year. In 2021, Lindman earns an income of $138,000 and declares cash dividends of $46,000. Previously, in 2020, Lindman had sold inventory costing $35,000 to Matthew for $50,000. Matthew consumed all but 25 percent of this merchandise during 2020 and used the rest during 2021. Lindman sold additional inventory costing $42,900 to Matthew for $65,000 in 2021. Matthew did not consume 40 percent of these 2021 purchases from Lindman until 2022. a. What amount of equity method income would Matthew recognize in 2021 from its ownership interest in Lindman? b. What is the equity method balance in the Investment in Lindman account at the end of 2021? a. b. Equity…
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Please include each step of calculations for my reference. Thanks!
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