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On July 1, 2022, Burrough Company acquired 136,000 of the outstanding shares of Carter Company for $15 per share. This acquisition gave Burrough a 25 percent ownership of Carter and allowed Burrough to significantly influence the investee's decisions. As of July 1, 2022, the investee had assets with a book value of $7 million and liabilities of $456,800. At the time, Carter held equipment appraised at $319,200 more than book value; it was considered to have a seven-year remaining life with no salvage value. Carter also held a copyright with a five-year remaining life on its books that was undervalued by $980,000. Any remaining excess cost was attributable to an indefinite-lived trademark. Depreciation and amortization are computed using the straight-line method. Burrough applies the equity method for its investment in Carter. Carter's policy is to declare and pay a $1 per share cash dividend every April 1 and October 1. Carter's income, earned evenly throughout each year, was $579,000 in 2022, $619,400 in 2023, and $675,200 in 2024. In addition, Burrough sold inventory costing $111,000 to Carter for $185,000 during 2023. Carter resold $82,500 of this inventory during 2023 and the remaining $102,500 during 2024. Required: a. Determine the equity income to be recognized by Burrough during each of these years. b. Compute Burrough's investment in Carter Company's balance as of December 31, 2024. Note: For all requirements, enter your answers in whole dollars and not in millions. W a. Equity income 2022 a. Equity income 2023 $ 84,200 a. Equity income 2024 $ 69 118.650 5 Q Search 1 < Prev 5 of 5 Next G H B N M K 50 711 O alt X W P r ins 711 prt sc delete home Dackspace lock enter pause shift

On July 1, 2022, Burrough Company acquired 136,000 of the outstanding shares of Carter Company for $15 per share. This acquisition gave Burrough a 25 percent ownership of Carter and allowed Burrough to significantly influence the investee's decisions. As of July 1, 2022, the investee had assets with a book value of $7 million and liabilities of $456,800. At the time, Carter held equipment appraised at $319,200 more than book value; it was considered to have a seven-year remaining life with no salvage value. Carter also held a copyright with a five-year remaining life on its books that was undervalued by $980,000. Any remaining excess cost was attributable to an indefinite-lived trademark. Depreciation and amortization are computed using the straight-line method. Burrough applies the equity method for its investment in Carter. Carter's policy is to declare and pay a $1 per share cash dividend every April 1 and October 1. Carter's income, earned evenly throughout each year, was $579,000 in 2022, $619,400 in 2023, and $675,200 in 2024. In addition, Burrough sold inventory costing $111,000 to Carter for $185,000 during 2023. Carter resold $82,500 of this inventory during 2023 and the remaining $102,500 during 2024. Required: a. Determine the equity income to be recognized by Burrough during each of these years. b. Compute Burrough's investment in Carter Company's balance as of December 31, 2024. Note: For all requirements, enter your answers in whole dollars and not in millions. W a. Equity income 2022 a. Equity income 2023 $ 84,200 a. Equity income 2024 $ 69 118.650 5 Q Search 1 < Prev 5 of 5 Next G H B N M K 50 711 O alt X W P r ins 711 prt sc delete home Dackspace lock enter pause shift

Intermediate Accounting: Reporting And Analysis
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter13: Investments And Long-term Receivables
Section: Chapter Questions
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On July 1, 2022, Burrough Company acquired 136,000 of the outstanding shares of Carter Company for $15 per share. This acquisition gave Burrough a 25 percent ownership of Carter and allowed Burrough to significantly influence the investee's decisions. As of July 1, 2022, the investee had assets with a book value of $7 million and liabilities of $456,800. At the time, Carter held equipment appraised at $319,200 more than book value; it was considered to have a seven-year remaining life with no salvage value. Carter also held a copyright with a five-year remaining life on its books that was undervalued by $980,000. Any remaining excess cost was attributable to an indefinite-lived trademark. Depreciation and amortization are computed using the straight-line method. Burrough applies the equity method for its investment in Carter. Carter's policy is to declare and pay a $1 per share cash dividend every April 1 and October 1. Carter's income, earned evenly throughout each year, was $579,000 in 2022, $619,400 in 2023, and $675,200 in 2024. In addition, Burrough sold inventory costing $111,000 to Carter for $185,000 during 2023. Carter resold $82,500 of this inventory during 2023 and the remaining $102,500 during 2024. Required: a. Determine the equity income to be recognized by Burrough during each of these years. b. Compute Burrough's investment in Carter Company's balance as of December 31, 2024. Note: For all requirements, enter your answers in whole dollars and not in millions. W a. Equity income 2022 a. Equity income 2023 $ 84,200 a. Equity income 2024 $ 69 118.650 5 Q Search 1 < Prev 5 of 5 Next G H B N M K 50 711 O alt X W P r ins 711 prt sc delete home Dackspace lock enter pause shift
Transcribed Image Text:On July 1, 2022, Burrough Company acquired 136,000 of the outstanding shares of Carter Company for $15 per share. This acquisition gave Burrough a 25 percent ownership of Carter and allowed Burrough to significantly influence the investee's decisions. As of July 1, 2022, the investee had assets with a book value of $7 million and liabilities of $456,800. At the time, Carter held equipment appraised at $319,200 more than book value; it was considered to have a seven-year remaining life with no salvage value. Carter also held a copyright with a five-year remaining life on its books that was undervalued by $980,000. Any remaining excess cost was attributable to an indefinite-lived trademark. Depreciation and amortization are computed using the straight-line method. Burrough applies the equity method for its investment in Carter. Carter's policy is to declare and pay a $1 per share cash dividend every April 1 and October 1. Carter's income, earned evenly throughout each year, was $579,000 in 2022, $619,400 in 2023, and $675,200 in 2024. In addition, Burrough sold inventory costing $111,000 to Carter for $185,000 during 2023. Carter resold $82,500 of this inventory during 2023 and the remaining $102,500 during 2024. Required: a. Determine the equity income to be recognized by Burrough during each of these years. b. Compute Burrough's investment in Carter Company's balance as of December 31, 2024. Note: For all requirements, enter your answers in whole dollars and not in millions. W a. Equity income 2022 a. Equity income 2023 $ 84,200 a. Equity income 2024 $ 69 118.650 5 Q Search 1 < Prev 5 of 5 Next G H B N M K 50 711 O alt X W P r ins 711 prt sc delete home Dackspace lock enter pause shift
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