Penston Company owns 40 percent (40,000 shares) of Scranton, Inc., which it purchased several years ago for $ 182,000. Since the date of acquisition, the equity method has been properly applied, and the book value of the investment account as of January 1, 2013, is $248,000. Excess patent cost amortization of $12,000 is still being recognized each year. During’2013, Scranton reports net income of $200,000; $320,000 in operating income earned evenly throughout the year, and a $ 120,000 extraordinary loss incurred on October 1. No dividends were paid during the year. Penston sold 8,000 shares of Scranton on August 1,2013, for $94,000in cash. However, Penston retains the ability to significantly influence the investee.
During the last quarter of 2012, Penston sold $50,000 in inventory (which it had originally purchased for only $30,000) to Scranton. At the end of that fiscal year, Scranton’s inventory retained $9,000 (at sales price) of this merchandise, which was subsequently sold in the first quarter of 2013.
On Penston’s financial statements for the year ended December 31, 2013, what-income effects would be reported from its ownership in Scranton?
We need at least 10 more requests to produce the solution.
0 / 10 have requested this problem solution
The more requests, the faster the answer.