On January 1, 2020, Stream Company acquired 25 percent of the outstanding voting shares of Q-Video, Inc., for $788,000. Q-Video manufactures specialty cables for computer monitors. On that date, Q-Video reported assets and liabilities with book values of $1.8 million and $650,000, respectively. A customer list compiled by Q-Video had an appraised value of $296,000, although it was not recorded on its books. The expected remaining life of the customer list was five 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 $324,000 in 2020 and a net loss of $104,000 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 $100,040 to Stream for $164,000. Of this balance, $82,000 was resold to outsiders during 2020, and the remainder was sold during 2021. In 2021, Q-Video sold inventory to Stream for $176,000. This inventory had cost only $132,000. Stream resold $100,000 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.) 2020 2021 of of
On January 1, 2020, Stream Company acquired 25 percent of the outstanding voting shares of Q-Video, Inc., for $788,000. Q-Video manufactures specialty cables for computer monitors. On that date, Q-Video reported assets and liabilities with book values of $1.8 million and $650,000, respectively. A customer list compiled by Q-Video had an appraised value of $296,000, although it was not recorded on its books. The expected remaining life of the customer list was five 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 $324,000 in 2020 and a net loss of $104,000 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 $100,040 to Stream for $164,000. Of this balance, $82,000 was resold to outsiders during 2020, and the remainder was sold during 2021. In 2021, Q-Video sold inventory to Stream for $176,000. This inventory had cost only $132,000. Stream resold $100,000 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.) 2020 2021 of 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 25 percent of the outstanding voting shares of Q-Video, Inc., for $788,000. Q-Video
manufactures specialty cables for computer monitors. On that date, Q-Video reported assets and liabilities with book values of $1.8
million and $650,000, respectively. A customer list compiled by Q-Video had an appraised value of $296,000, although it was not
recorded on its books. The expected remaining life of the customer list was five 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 $324,000 in 2020 and a net loss of $104,000 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 $100,040 to Stream for $164,000. Of this balance, $82,000 was
resold to outsiders during 2020, and the remainder was sold during 2021. In 2021, Q-Video sold inventory to Stream for $176,000. This
inventory had cost only $132,000. Stream resold $100,000 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.)
2020
2021
of
of
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