Pearl Corporation paid $150,000 on January 1,2010 for a 25% interest in Sandlin Inc.On January 1,2010,the book value of Sandlin's stockholders' equity consisted of $200,000 of common stock and $200,000 of retained earnings.All the excess purchase cost over book value acquired was attributable to a patent with an estimated life of 5 years.During 2010 and 2011,Sandlin paid $3,000 of dividends each quarter and reported net income of $60,000 for 2010 and $80,000 for 2011.Pearl used the equity method.
Required:
1.Calculate Pearl's income from Sandlin for 2010.
2.Calculate Pearl's income from Sandlin for 2011.
3.Determine the balance of Pearl's Investment in Sandlin account on December 31,2011.

Question

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The Answer of Pearl Corporation paid $150,000 on January 1,2010 for a 25% interest in Sandlin Inc.On January 1,2010,the book value of Sandlin's stockholders' equity consisted of $200,000 of common stock and $200,000 of retained earnings.All the excess purchase cost over book value acquired was attributable to a patent with an estimated life of 5 years.During 2010 and 2011,Sandlin paid $3,000 of dividends each quarter and reported net income of $60,000 for 2010 and $80,000 for 2011.Pearl used the equity method.
Required:
1.Calculate Pearl's income from Sandlin for 2010.
2.Calculate Pearl's income from Sandlin for 2011.
3.Determine the balance of Pearl's Investment in Sandlin account on December 31,2011.

Pearl Corporation Paid $150,000 on January 1,2010 for a 25