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BuyCo holds 25 percent of the outstanding shares of Marqueen and appropriately applies the equity…
BuyCo holds 25 percent of the outstanding shares of Marqueen and appropriately applies the equity…
| BuyCo holds 25 percent of the outstanding shares of Marqueen and appropriately applies the equity method of accounting. Excess cost amortization (related to a patent) associated with this investment amounts to $10,000 per year. For 2012, Marqueen reported earnings of $100,000 and pays cash dividends of $30,000. During that year, Marqueen acquired inventory for $50,000, which it then sold to BuyCo for $80,000. At the end of 2012, BuyCo continued to hold merchandise with a transfer price of $32,000. |
| a. | What Equity in Investee Income should BuyCo report for 2012? |
| Equity in Investee Income |
$ |
| b. | How will the intra-entity transfer affect BuyCo s reporting in 2013? |
| Equity accrual for 2013 will (Click to select)increasedecreaseby $ . |
| c. | If BuyCo had sold the inventory to Marqueen, whether the answers to (a) and (b) would change? |
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