Applies the equity method of accounting

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Buyco holds 25 percent of outstanding shares of Marqueen and appropriately applies the equity method of accounting. Excess cost amortization (related to a patent) associated with his investment amounts to $10,000 per year. For 2012, Marqueen reported earnings of $100,000 and pays cash dividends of $30,000. During that year, Margueen acquired inventory for $50,000, which it then sold to buyCo for $80,000. At the end of 2012, BuyCo continued to hold merchandise with a transfer price of $32,000. A) What equity in Investee income should BuyCo report for 2012? . B) how will intra-entry transfer affect BuyCo's reporting in 2013 ?. C) if BuyCO had sold the inventory to Marqueen, whether the answers to (a) and (b) would change ?

Reference no: EM13297835

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