What is equity in Maya income that should be recognized by Cayman in 2023?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Cayman Inc. bought 25% of Maya Company on January 1, 2022 for $800,000. The equity
method of accounting was used. The book value and fair value of the net assets of Maya
on that date were $2,100,000. Maya began supplying inventory to Cayman as follows:
Year Cost to Maya Transfer Price Amount Held by Cayman at Year-End
2022$ 30,000 $ 45,000 $
8,400
2023$ 48,000 $ 80,000 $
20,000
Maya reported net income of $100,000 in 2022 and $120,000 in 2023 while paying
$40,000 in dividends each year.
What is equity in Maya income that should be recognized by Cayman in 2023?
O $25,000
Ob $28,700
O $2,000
Od $31,300
e$30,000
Transcribed Image Text:Cayman Inc. bought 25% of Maya Company on January 1, 2022 for $800,000. The equity method of accounting was used. The book value and fair value of the net assets of Maya on that date were $2,100,000. Maya began supplying inventory to Cayman as follows: Year Cost to Maya Transfer Price Amount Held by Cayman at Year-End 2022$ 30,000 $ 45,000 $ 8,400 2023$ 48,000 $ 80,000 $ 20,000 Maya reported net income of $100,000 in 2022 and $120,000 in 2023 while paying $40,000 in dividends each year. What is equity in Maya income that should be recognized by Cayman in 2023? O $25,000 Ob $28,700 O $2,000 Od $31,300 e$30,000
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