On January 1, 2009, (A) Co. acquired all of the common stock of (B) Corp. For 2009, (B) earned net income of JD 360,000 and paid dividends of JD 190,000. Amortization of the patent allocation that was included in the acquisition was JD 6,000. 1. How much difference would there have been in (B)'s income with regard to the effect of the investment, between using the equity method or using the cost value method? 2. How much difference would there have been in (A)'s income with regard to the effect of the investment, between using the equity method or using the partial equity method

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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On January 1, 2009, (A) Co. acquired all of the common
stock of (B) Corp. For 2009, (B) earned net income of JD
360,000 and paid dividends of JD 190,000. Amortization of
the patent allocation that was included in the acquisition
was JD 6,000.
1. How much difference would there have been in (B)'s
income with regard to the effect of the investment, between
using the equity method or using the cost value method ?
2. How much difference would there have been in (A)'s
income with regard to the effect of the investment, between
using the equity method or using the partial equity method
?
Transcribed Image Text:On January 1, 2009, (A) Co. acquired all of the common stock of (B) Corp. For 2009, (B) earned net income of JD 360,000 and paid dividends of JD 190,000. Amortization of the patent allocation that was included in the acquisition was JD 6,000. 1. How much difference would there have been in (B)'s income with regard to the effect of the investment, between using the equity method or using the cost value method ? 2. How much difference would there have been in (A)'s income with regard to the effect of the investment, between using the equity method or using the partial equity method ?
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