Pronto Communications acquired the voting stock of Singer Telecom on January 1, 2019. It is now December 31, 2021, three years later. Pronto uses the complete equity method to report its investment in Singer on its own books. Both companies have December 31 year-ends. The following information is available:
•Pronto paid $600,000 to acquire Singer.
•At the date of acquisition, the book values of all of Singer's reported assets and liabilities approximated fair value. Previously unreported limited-lived identifiable intangibles with a fair value of $50,000 were recognized. These intangibles had an estimated life of 5 years, straight-line. There have been no impairment losses.
• Total goodwill impairment losses for 2019 and 2020 totaled $2,000. There is no goodwill impairment for 2021.
•The change in Singer's retained earnings from January 1, 2019 to December 31, 2020, was $24,500.
•In 2021, Singer reported net income of $11,200 and declared and paid dividends of $400.
•Singer does not report any other comprehensive income.
Required
a. Calculate equity in net income for 2021, reported on Pronto's books.
b. Calculate the December 31, 2021 balance in Investment in Singer, reported on Pronto's books.

Question

Quizplus · Accepted Answer

The Answer of Pronto Communications acquired the voting stock of Singer Telecom on January 1, 2019. It is now December 31, 2021, three years later. Pronto uses the complete equity method to report its investment in Singer on its own books. Both companies have December 31 year-ends. The following information is available:
•Pronto paid $600,000 to acquire Singer.
•At the date of acquisition, the book values of all of Singer's reported assets and liabilities approximated fair value. Previously unreported limited-lived identifiable intangibles with a fair value of $50,000 were recognized. These intangibles had an estimated life of 5 years, straight-line. There have been no impairment losses.
• Total goodwill impairment losses for 2019 and 2020 totaled $2,000. There is no goodwill impairment for 2021.
•The change in Singer's retained earnings from January 1, 2019 to December 31, 2020, was $24,500.
•In 2021, Singer reported net income of $11,200 and declared and paid dividends of $400.
•Singer does not report any other comprehensive income.
Required
a. Calculate equity in net income for 2021, reported on Pronto's books.
b. Calculate the December 31, 2021 balance in Investment in Singer, reported on Pronto's books.

Pronto Communications Acquired the Voting Stock of Singer Telecom on January