Reference no: EM131802500
Question - On January 1, 2010, Stream Company acquired 30 percent of the outstanding voting shares of Q-Video, Inc., for $770,000. Q-Video manufactures specialty cables for computer monitors. On that date, Q-Video reported assets and liabilities with book values of $1.9 million and $700,000, respectively. A customer list compiled by Q-Video had an appraised value of $300,000, although it was not recorded on its books. The expected remaining life of the customer list was five years with a straight-line depreciation deemed appropriate. Any remaining excess cost was not identifiable with any particular asset and thus was considered goodwill.
Q-Video generated net income of $250,000 in 2010 and a net loss of $100,000 in 2011. In each of these two years, Q-Video paid a cash dividend of $15,000 to its stockholders.
During 2010, Q-Video sold inventory that had an original cost of $100,000 to Stream for $160,000. Of this balance, $80,000 was resold to outsiders during 2010, and the remainder was sold during 2011. In 2011, Q-Video sold inventory to Stream for $175,000. This inventory had cost only $140,000. Stream resold $100,000 of the inventory during 2011 and the rest during 2012.
For 2010 and then for 2011, compute the amount that Stream should report as income from its investment in Q-Video in its external financial statements under the equity method.
Question:
The amount of equity income(loss) in 2010?
The amount of equity income(loss) in 2011?