Plastic Company purchased 100 percent of Spoon Company's voting common stock for $666,000 on January 1, 20X4. At that date, Spoo

Question

3 years ago

11

Plastic Company purchased 100 percent of Spoon Company's voting common stock for $666,000 on January 1, 20X4. At that date, Spoo

n reported assets of $697,000 and liabilities of $241,000. The book values and fair values of Spoon's assets were equal except for land, which had a fair value $116,000 more than book value, and equipment, which had a fair value $94,000 more than book value. The remaining economic life of all depreciable assets at January 1, 20X4, was ten years. Spoon reported net income of $78,000 and paid dividends of $53,000 in 20X4.
Required:
Compute the amount of investment income to be reported by Plastic using the equity method for 20X4.

Business