Equity Method Acct Problem

Hire our professional essay experts at Gradehunters.net who are available online 24/7 for an essay paper written to a high standard at an affordable cost.


Order a Similar Paper Order a Different Paper

Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2104. Demers reported common stock of $300,000, and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on annual review, goodwill has not been impaired.

Demers earns income and pays dividends as follows:

2014 2015 2016

Net income $100,000 $120,000 $130,000

Dividends $40,000 $50,000 $60,000

Assume the EQUITY METHOD is applied.

Compute Pell’s investment account balance in Demers at December 31, 2016

Select one:

A. $763,200

B. $620,000

C. $639,000

D. $643,200

Compute the non-controlling interest in the net income of Demers at December 31, 2015

Select one:

A. $18,400

B. $14,400

C. $12,600

D. $22,600

E. $24,000

Compute the non-controlling interest in Demers at December 31, 2014.

Select one:

A. $118,600

B. $112,000

C. $100,000

D. $135,600

E. $137,000

Writerbay.net

Everyone needs a little help with academic work from time to time. Hire the best essay writing professionals working for us today!

Get a 15% discount for your first order


Order a Similar Paper Order a Different Paper