Reference no: EM132539745

Question 1: Pepe, Inc. acquired 60% of Devin Co. on January 1, 2019. On that date Devin sold equipment to Pepe for $80,000. The equipment had a cost of $120,000 and accumulated depreciation of $60,000 with a remaining life of 5 years. Devin reported net income of $300,000 and $325,000 for 2019 and 2020, respectively. Pepe uses the equity method to account for its investment in Devin. Assuming there are no excess amortizations or other intra-entity transactions, compute the noncontrolling interest share of Devin income for 2019 and 2020.

Group of answer choices

Option 1: $112,000 (2019) and $131,600 (2020)

Option 2: $112,000 (2019) and $131,600 (2020)

Option 3: $113,600 (2019) and $131,600 (2020)

Option 4: $113,600 (2019) and $123,600 (2020)

Option 5: $120,000 (2019) and $130,000 (2020)