On January 1, 2023, Stream Company acquired 20 percent of the outstanding voting shares of Q-Video, Incorporated, for $774,000. Q- Video manufactures specialty cables for computer monitors. On that date, Q-Video reported assets and liabilities with book values of $2.2 million and $658,000, respectively. A customer list compiled by Q-Video had an appraised value of $360,000, 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 $316,000 in 2023 and a net loss of $130,000 in 2024. In each of these two years, Q-Video declared and paid a cash dividend of $18,000 to its stockholders. During 2023, Q-Video sold inventory that had an original cost of $84,000 to Stream for $150,000. Of this balance, $75,000 was resold to outsiders during 2023, and the remainder was sold during 2024. In 2024, Q-Video sold inventory to Stream for $170,000. This inventory had cost only $136,000. Stream resold $108,000 of the inventory during 2024 and the rest during 2025. Required: For 2023 and then for 2024, compute the amount that Stream should report as income from its investment in Q-Video in its external financial statements under the equity method. Note: Enter your answers in whole dollars and not in millions. 2023 Equity income of 2024 Equity loss of $ 46,790 $ (26,000)

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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On January 1, 2023, Stream Company acquired 20 percent of the outstanding voting shares of Q-Video, Incorporated, for $774,000. Q-
Video manufactures specialty cables for computer monitors. On that date, Q-Video reported assets and liabilities with book values of
$2.2 million and $658,000, respectively. A customer list compiled by Q-Video had an appraised value of $360,000, 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 $316,000 in 2023 and a net loss of $130,000 in 2024. In each of these two years, Q-Video declared
and paid a cash dividend of $18,000 to its stockholders.
During 2023, Q-Video sold inventory that had an original cost of $84,000 to Stream for $150,000. Of this balance, $75,000 was resold
to outsiders during 2023, and the remainder was sold during 2024. In 2024, Q-Video sold inventory to Stream for $170,000. This
inventory had cost only $136,000. Stream resold $108,000 of the inventory during 2024 and the rest during 2025.
Required:
For 2023 and then for 2024, compute the amount that Stream should report as income from its investment in Q-Video in its external
financial statements under the equity method.
Note: Enter your answers in whole dollars and not in millions.
2023 Equity income of $ 46,790
2024 Equity loss
of
$ (26,000)
Transcribed Image Text:On January 1, 2023, Stream Company acquired 20 percent of the outstanding voting shares of Q-Video, Incorporated, for $774,000. Q- Video manufactures specialty cables for computer monitors. On that date, Q-Video reported assets and liabilities with book values of $2.2 million and $658,000, respectively. A customer list compiled by Q-Video had an appraised value of $360,000, 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 $316,000 in 2023 and a net loss of $130,000 in 2024. In each of these two years, Q-Video declared and paid a cash dividend of $18,000 to its stockholders. During 2023, Q-Video sold inventory that had an original cost of $84,000 to Stream for $150,000. Of this balance, $75,000 was resold to outsiders during 2023, and the remainder was sold during 2024. In 2024, Q-Video sold inventory to Stream for $170,000. This inventory had cost only $136,000. Stream resold $108,000 of the inventory during 2024 and the rest during 2025. Required: For 2023 and then for 2024, compute the amount that Stream should report as income from its investment in Q-Video in its external financial statements under the equity method. Note: Enter your answers in whole dollars and not in millions. 2023 Equity income of $ 46,790 2024 Equity loss of $ (26,000)
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