Compute what amount of equity method would matthew recognize

Assignment Help Accounting Basics

Reference no: EM131912951

Problem

Matthew owns 30 percent of the outstanding stock of Lindman and has the ability to significantly influence the investee's operations and decision making. On January 1, 2015, the balance in the Investment in Lindman account is $385,000. Amortization associated with this acquisition is $17,500 per year. In 2015, Lindman earns an income of $115,500 and declares cash dividends of $38,500. Previously, in 2014, Lindman had sold inventory costing $32,800 to Matthew for $41,000. Matthew consumed all but 30 percent of this merchandise during 2014 and used the rest during 2015. Lindman sold additional inventory costing $45,600 to Matthew for $60,000 in 2015. Matthew did not consume 40 percent of these 2015 purchases from Lindman until 2016.

a. What amount of equity method income would Matthew recognize in 2015 from its ownership interest in Lindman?

b. What is the equity method balance in the Investment in Lindman account at the end of 2015?

Reference no: EM131912951

Questions Cloud

What is the yield to call : The par value of the bonds is $1,000. If the yield to maturity is 7 percent, what is the yield to call?

What benefits and limitations do you predict : Review Hoover's report on the National Interstate Corporation by using the Business Market Research Collection in the LIRN (see full reference below).

Equipment repair business where emergency jobs : A manufacturing company operates an equipment repair business where emergency jobs arrive randomly at the rate of two jobs per 8-hour day.

How much is this deal presently worth to the investor : Assuming the investor's required rate of return is 10%, how much is this deal presently worth to the investor who was willing to sell??

Compute what amount of equity method would matthew recognize : Compute What amount of equity method income would Matthew recognize in 2015 from its ownership interest in Lindman?

Determine the current value of the company : Suppose the company can borrow at 8 percent. What will the value of the firm be if the company takes on debt equal to 60 percent of its unlevered value?

Description of firm and its management : Firm, Industry and Environment (please be brief, this IS a finance and accounting course not a history class!) Description of firm and its management.

What is the equity method balance in investment in lindman : Matthew owns 30 percent of the outstanding stock of Lindman. What is the equity method balance in the Investment in Lindman account at the end of 2015?

What is the probability that exactly 1 of them favor : If 8 people are chosen at random for a poll, what is the probability that exactly 1 of them favor Candidate A?

User Account

All Pages