On January 2,2010,Slurg Corporation paid $600,000 to acquire 20% interest in Padwaddy Inc.At that time,the book value of Padwaddy's stockholders' equity included $700,000 of common stock and $1,800,000 of retained earnings.All the excess purchase cost over the book value acquired was attributable to a patent with an estimated life of 10 years.Padwaddy paid $6,250 of dividends each quarter for the next two years,and reported net income of $180,000 for 2010 and $220,000 for 2011.Slurg recorded all activities related to their investment using the equity method.
Required:
1.Calculate Slurg's income from Padwaddy for 2010.
2.Calculate Slurg's income from Padwaddy for 2011.
3.Determine the balance of Slurg's Investment in Padwaddy account on December 31,2011.

Question

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The Answer of On January 2,2010,Slurg Corporation paid $600,000 to acquire 20% interest in Padwaddy Inc.At that time,the book value of Padwaddy's stockholders' equity included $700,000 of common stock and $1,800,000 of retained earnings.All the excess purchase cost over the book value acquired was attributable to a patent with an estimated life of 10 years.Padwaddy paid $6,250 of dividends each quarter for the next two years,and reported net income of $180,000 for 2010 and $220,000 for 2011.Slurg recorded all activities related to their investment using the equity method.
Required:
1.Calculate Slurg's income from Padwaddy for 2010.
2.Calculate Slurg's income from Padwaddy for 2011.
3.Determine the balance of Slurg's Investment in Padwaddy account on December 31,2011.

On January 2,2010,Slurg Corporation Paid $600,000 to Acquire 20% Interest