Anderson acquires 10 percent of the outstanding voting

Reference no: EM13580118

Anderson acquires 10 percent of the outstanding voting shares of Barringer on January 1, 2011, for $105,300 and categorizes the investment as an available-for-sale security. An additional 20 percent of the stock is purchased on January 1, 2012, for $229,750, which gives Anderson the ability to significantly influence Barringer. Barringer has a book value of $885,000 at January 1, 2011, and records net income of $184,000 for that year. Barringer paid dividends of $113,000 during 2011. The book values of Barringer%u2019s asset and liability accounts are considered as equal to fair values except for a copyright whose value accounted for Anderson%u2019s excess cost in each purchase. The copyright had a remaining life of 16 years at January 1, 2011.

Barringer reported $215,500 of net income during 2012 and $328,500 in 2013. Dividends of $135,000 are paid in each of these years. Anderson uses the equity method.

a.On comparative income statements issued in 2013 by Anderson for 2011 and 2012, what amounts of income would be reported in connection with the company%u2019s investment in Barringer?What's the Equity income for 2012____?If Anderson sells its entire investment in Barringer on January 1, 2014, for $441,000 cash, what is the impact on Anderson%u2019s income?

Reference no: EM13580118

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