What is equity in Maya income that should be recognized by Cayman in 2023?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
![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](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F202cad09-66ec-45e3-9680-fd593c683b25%2F72ed0e7c-7a75-4242-bb34-c751ab3a0831%2Fll7vbpl_processed.jpeg&w=3840&q=75)
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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