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

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

Section: Chapter Questions

Problem 1Q

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Question

100%

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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