What equity in investee income should mikeco report

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MikeCo, Inc. holds 24 percent of the outstanding shares of Mark company and appropriately applies the equity method of accounting. Excess cost amortization (related to a patent) associated with this investment amounts to $11,000 per year. For 2017, Mark reported earnings of $116,000 and declares cash dividends of $31,000. During that year, Mark acquired inventory for $52,000, which it then sold to MikeCo for $86,000. At the end of 2017, MikeCo continued to hold merchandise with a transfer price of $30,000.

Question 1:
What Equity in Investee Income should MikeCo report for 2017?

Question 2: How will the intra-entity transfer affect MikeCo's reporting in 2018?

Question 3:
If MikeCo had sold the inventory to Mark, how would the answers to (a) and (b) have changed?

Reference no: EM132786683

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