remier Inc. acquired a 42% interest in Jungle Vine Inc. (JV) for $86,000 cash on January 1, 2017 when JV had retained earnings of $100,000. On purchase of shares of JV, the acquisition differential schedule relating to Premier's share of JV was: Equipment $10,000 Goodwill $35,000 $45,000 Equipment was expected to last five more years from date of acquisition and is still owned at year end. Goodwill was written down by $5,000 in 2018. In 2019, Premier sold JV land, reporting a gain of $20,000. JV still has the land. In 2019, JV sold Premier inventory for $30,000 reporting a profit of $6,000. $15,000 of the inventory was still held by Premier at the end of 2019 and sold early in 2020. In 2020, JV reported net income of $35,000 and declared and paid total dividends of $15,000. At December 31, 2020, JV had retained earnings of $160,000.
remier Inc. acquired a 42% interest in Jungle Vine Inc. (JV) for $86,000 cash on January 1, 2017 when JV had retained earnings of $100,000. On purchase of shares of JV, the acquisition differential schedule relating to Premier's share of JV was: Equipment $10,000 Goodwill $35,000 $45,000 Equipment was expected to last five more years from date of acquisition and is still owned at year end. Goodwill was written down by $5,000 in 2018. In 2019, Premier sold JV land, reporting a gain of $20,000. JV still has the land. In 2019, JV sold Premier inventory for $30,000 reporting a profit of $6,000. $15,000 of the inventory was still held by Premier at the end of 2019 and sold early in 2020. In 2020, JV reported net income of $35,000 and declared and paid total dividends of $15,000. At December 31, 2020, JV had retained earnings of $160,000.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
| Premier Inc. acquired a 42% interest in Jungle Vine Inc. (JV) for $86,000 cash on January 1, 2017 when JV had |
On purchase of shares of JV, the acquisition differential schedule relating to Premier's share of JV was:
| Equipment | $10,000 |
| |
$35,000 |
| $45,000 |
| Equipment was expected to last five more years from date of acquisition and is still owned at year end. | ||
| Goodwill was written down by $5,000 in 2018. |
| In 2019, Premier sold JV land, reporting a gain of $20,000. JV still has the land. In 2019, JV sold Premier inventory for $30,000 reporting a profit of $6,000. $15,000 of the inventory was still held by Premier at the end of 2019 and sold early in 2020. |
| In 2020, JV reported net income of $35,000 and declared and paid total dividends of $15,000. At December 31, 2020, JV had retained earnings of $160,000. |
Calculate the equity method income related to Jv for 2020 reported by Premier.
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