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What amount of equity income cantle report for investment

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Reference no: EM132538462

Cantle Inc. purchased a 30% interest in Rockton Ltd. in 20X1. It was determined that Cantle had significant influence over Rockton and therefore reports its investment in Rockton using the equity method.

Upon purchasing Rockton, Cantle reported the following fair value (FV) differentials:

Land: FV greater than book value by $21,000.

Equipment: Book value greater than FV by $24,000.

  • The equipment had a useful life of six years and none has been sold to date.
  • In 20X3, Rockton sold one-third of its land. Rockton reported net income of $125,000 for 20X3, and its net income included an $18,000 gain on the sale of the land.
  • Cantle and Rockton's tax rate is 35.3%

Question 1: What amount of equity income would Cantle report for its investment in Rockton for 20X3?

Option a) $34,324

Option b) $34,676

Option c) $35,559

Option d) $40,676

Reference no: EM132538462

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