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Travka [436]
3 years ago
8

On January 1, Hillcrest Co. acquired a 40% interest in Preston, Inc. with the excess of purchase price over book value solely at

tributable to equipment with a ten-year life and undervaluation by $250,000. During the year of acquisition, Preston reported net income of $500,000. What amount of Equity Income should Hillcrest report on its income statement for the year of acquisition? Select one: A. $200,000 B. $210,000 C. $190,000 D. $250,000
Business
1 answer:
olasank [31]3 years ago
4 0

Answer:

C. $190,000

Explanation:

As per the given question the solution of Income reported on Income statement is provided below:-

here, we ill find first share in equity income and depreciation expenses on undervalue equipment to reach the i ncome reported on Income statement

Share in equity income = Net income × Interest

= $500,000 × 40%

= $200,000

Depreciation expenses on undervalue equipment = undervaluation ÷ Number of years × Interest

= $250,000 ÷ 10 × 40%

= $10,000

Income reported on Income statement = Share in equity income -Depreciation expenses on undervalue equipment

= $200,000 - $10,000

= $190,000

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Stanley likes using fountain pens. When he came across a new series of fountain pens manufactured by Dilloit Pens, he eagerly bo
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3 years ago
Suppose the economy is experiencing an output gap of –3%. a. Select each response that indicates how monetary policy or fiscal p
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Answer:

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The Fed can reduce the interest rate, which will shift the MP curve down and increase GDP.

b. The policies identified in part a,

can be used together to raise actual output toward potential output.

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3 years ago
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$

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3 years ago
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