On January 1, 2020, Stream Company acquired 20 percent of the outstanding voting shares of Q-Video, Inc., for $702,000. Q-Video manufactures specialty cables for computer monitors. On that date, Q-Video reported assets and liabilities with book values of $2.0 million and $746,000, respectively. A customer list compiled by Q-Video had an appraised value of $330,000, although it was not recorded on its books. The expected remaining life of the customer list was twenty years with straight-line amortization deemed appropriate. Any remaining excess cost was not identifiable with any particular asset and thus was considered goodwill. Q-Video generated net income of $208,000 in 2020 and a net loss of $84,000 in 2021. In each of these two years, Q-Video declared and paid a cash dividend of $10,000 to its stockholders. During 2020, Q-Video sold inventory that had an original cost of $92,040 to Stream for $156,000. Of this balance, $78,000 was resold to outsiders during 2020, and the remainder was sold during 2021. In 2021, Q-Video sold inventory to Stream for $184,000. This inventory had cost only $138,000. Stream resold $98,000 of the inventory during 2021 and the rest during 2022. For 2020 and then for 2021, compute the amount that Stream should report as income from its investment in Q-Video in its external financial statements under the equity method. (Enter your answers in whole dollars and not in millions. Do not round intermediate calculations.) Answer is not complete. 2020 2021 Equity income Equity loss of $ 22,940x ✓ of
On January 1, 2020, Stream Company acquired 20 percent of the outstanding voting shares of Q-Video, Inc., for $702,000. Q-Video manufactures specialty cables for computer monitors. On that date, Q-Video reported assets and liabilities with book values of $2.0 million and $746,000, respectively. A customer list compiled by Q-Video had an appraised value of $330,000, although it was not recorded on its books. The expected remaining life of the customer list was twenty years with straight-line amortization deemed appropriate. Any remaining excess cost was not identifiable with any particular asset and thus was considered goodwill. Q-Video generated net income of $208,000 in 2020 and a net loss of $84,000 in 2021. In each of these two years, Q-Video declared and paid a cash dividend of $10,000 to its stockholders. During 2020, Q-Video sold inventory that had an original cost of $92,040 to Stream for $156,000. Of this balance, $78,000 was resold to outsiders during 2020, and the remainder was sold during 2021. In 2021, Q-Video sold inventory to Stream for $184,000. This inventory had cost only $138,000. Stream resold $98,000 of the inventory during 2021 and the rest during 2022. For 2020 and then for 2021, compute the amount that Stream should report as income from its investment in Q-Video in its external financial statements under the equity method. (Enter your answers in whole dollars and not in millions. Do not round intermediate calculations.) Answer is not complete. 2020 2021 Equity income Equity loss of $ 22,940x ✓ of
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:On January 1, 2020, Stream Company acquired 20 percent of the outstanding voting shares of Q-Video,
Inc., for $702,000. Q-Video manufactures specialty cables for computer monitors. On that date, Q-Video
reported assets and liabilities with book values of $2.0 million and $746,000, respectively. A customer list
compiled by Q-Video had an appraised value of $330,000, although it was not recorded on its books. The
expected remaining life of the customer list was twenty years with straight-line amortization deemed
appropriate. Any remaining excess cost was not identifiable with any particular asset and thus was
considered goodwill.
Q-Video generated net income of $208,000 in 2020 and a net loss of $84,000 in 2021. In each of these
two years, Q-Video declared and paid a cash dividend of $10,000 to its stockholders.
During 2020, Q-Video sold inventory that had an original cost of $92,040 to Stream for $156,000. Of this
balance, $78,000 was resold to outsiders during 2020, and the remainder was sold during 2021. In 2021,
Q-Video sold inventory to Stream for $184,000. This inventory had cost only $138,000. Stream resold
$98,000 of the inventory during 2021 and the rest during 2022.
For 2020 and then for 2021, compute the amount that Stream should report as income from its investment
in Q-Video in its external financial statements under the equity method. (Enter your answers in whole
dollars and not in millions. Do not round intermediate calculations.)
Answer is not complete.
2020
2021
Equity income
Equity loss
of
$ 22,940x
✓ of
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