Elucidate equity in investee income should hager report

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Reference no: EM13144119

Hager holds 30 percent of the outstanding shares of Jenkins and appropriately applies the equity method of accounting. Excess cost amortization (related to a patent) associated with this investment amounts to $9,000 per year. For 2010, Jenkins reported earnings of $80,000 and pays cash dividends of $30,000. During that year, Jenkins acquired inventory for $50,000, which it then sold to Hager for $80,000. At the end of 2010, Hager continued to hold merchandise with a transfer price of $40,000.

(a) What Equity in Investee Income should Hager report for 2010?

Reference no: EM13144119

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