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Plastic Company purchased 100 percent of Spoon Company's voting common stock for $657,000 on January 1, 20X4. At that date, Spoon reported assets of $707,000 and liabilities of $249,000. The book values and fair values of Spoon's assets were equal except for land, which had a fair value $118,000 more than book value, and equipment, which had a fair value $81,000 more than book value. The remaining economic life of all depreciable assets at January 1

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Tundexi

Answer:

$51,800

Explanation:

Missing word "January 1,20x4, was five years. Spoon reported net income of $68,000 and paid dividends of $34,000 in 20X4 Required Compute the amount of investment income to be reported by Plastic for 20X4"

Share in income from investment  ($68,000*100%)    $68,000

Adjustment:

Depreciation on equipment            ($81,000/5)            $16,200

Investment Income (Loss)                                             $51,800

Note: Land is never depreciated.

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