On January 1, 2024, Archer, Incorporated, paid $100,000 for…
On January 1, 2024, Archer, Incorporated, paid $100,000 for a 30% interest in Harley Corporation. This investee had assets with a book value of $550,000 and liabilities of $300,000. A patent (related to the entire ownership in the company) held by Harley, having a book value of $10,000, was actually worth $40,000 with a six-year remaining life. Any goodwill associated with this acquisition is considered to have an indefinite life. During 2023, Harley reported net income of $50,000 and paid dividends of $20,000. Assume Archer has the ability to significantly influence the operations of Harley.What amount of equity in income from Harley should Archer, Inc. report on its December 31, 2024, income statement?
Read DetailsOn January 1, 2024, Corzine Incorporated acquired 15% of Ham…
On January 1, 2024, Corzine Incorporated acquired 15% of Hammon Company’s outstanding common stock for $62,400 and did not exercise significant influence. Hammon earned net income of $96,000 in 2024 and paid dividends of $36,000. The fair value of Corzine’s investment was $80,000 at December 31, 2024. On January 3, 2025, Corzine bought an additional 10% of Hammon for $54,000. This second purchase gave Corzine the ability to significantly influence the decision making of Hammon. At the date of the second purchase, Corzine concluded that Hammon Company’s book values approximated fair values and attributed any excess cost to goodwill. During 2025, Hammon earned $120,000 and paid $48,000 in dividends. As of December 31, 2025, Hammon reported a net book value of $468,000. What amount of equity income should Corzine have reported for 2025?
Read Details