Reference no: EM133060526

Question - Matthew owns 30% of the outstanding shares of Lindman and has the ability to significantly influence the investee's operations and decision making. On January 1, 2015, the balance in the investment in Lindman's account is $335,000. Amortization associated with this acquisition is $9,000 annually. In 2015, Lindman earns  an income of $90,000 and declares cash dividends of $30,000.

Previously, in 2014, Lindman sold inventory costing $24,000 to Matthew for $40,000. Matthew consumed all but 25% of this inventory during 2014 and used the rest in 2015.

Lindman sold additional inventory costing 28,000 to Matthew for $50,000 in 2015. Matthew did not consume 40% of these purchases until 2016.

Required -

A) What amount of equity method income would Matthew recognize in 2015 from his ownership in Lindman?

B) What is the equity method balance in the investment in Lindman account at the end of 2015?