Tinker Co. owns 25% of the common stock of Harbor Co. and uses the equity method to account for the investment. During 2011, Harbor reported income of $120,000 and paid dividends of $40,000. Harbor owns a building with a useful life of twenty years which is undervalued by $80,000.
Required:
Prepare a schedule to show the equity income Tinker should recognize for 2011 related to this investment.

Question

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The Answer of Tinker Co. owns 25% of the common stock of Harbor Co. and uses the equity method to account for the investment. During 2011, Harbor reported income of $120,000 and paid dividends of $40,000. Harbor owns a building with a useful life of twenty years which is undervalued by $80,000.
Required:
Prepare a schedule to show the equity income Tinker should recognize for 2011 related to this investment.

Tinker Co Owns 25% of the Common Stock of Harbor Co