Reference no: EM132462440

Pinta Company purchased 40% of Snuggie Corporation on January 1, 2017 for $150,000. Snuggie Corporation's balance sheet at the time of acquisition was as follows:

Cash	$30,000	Current Liabilities	$40,000
Accounts Receivable	120,000	Bonds Payable	200,000
Inventory	80,000	Common Stock	200,000
Land	150,000	Additional Paid in Capital	40,000
Buildings &	300,000	Retained Earnings	80.000
Equipment
Less. Acc.	1120.000)
Depreciation
Total Assets	$560,000	Total Liabilities and	$560,000
		Equities

The fair values of Snuggie's assets and liabilities were equal to their book values at the date of acquisition, with the exception of Building and Equipment, which had a fair value of $35,000 above book value. All buildings and equipment had a remaining useful life of five years at the time of the acquisition. The amount attributed to goodwill as a result of the acquisition is not impaired.

Required:

Question A. What amount of investment income will Pinta record during 2017 under the equity method of accounting?

Question B. What amount of income will Pinta record during 2017 under the cost method of accounting?

Question C. What will be the balance in the investment account on December 31, 2017 under the cost and equity method of accounting?