Chapter 1, Problem 32P

On January 1, 2017, Stream Company acquired 30 percent of the outstanding voting shares of Q-Video, Inc., for $770,000. Q-Video manufactures specialty cables for computer monitors. On that date, Q-Video reported assets and liabilities with book values of $1.9 million and $700,000, respectively. A customer list compiled by Q-Video had an appraised value of $300,000, although it was not recorded on its books. The expected remaining life of the customer list was five years with straight-line amortization deemed appropriate. Any remaining excess cost was not identifiable with any particular asset and thus was considered goodwill. Q-Video generated net income of $250,000 in 2017 and a net loss of $100,000 in 2018. In each of these two years, Q-Video declared and paid a cash dividend of $15,000 to its stockholders. During 2017, Q-Video sold inventory that had an original cost of $100,000 to Stream for $160,000. Of this balance, $80,000 was resold to outsiders during 2017, and the remainder…

On January 1, 2023, Stream Company acquired 20 percent of the outstanding voting shares of Q-Video, Incorporated, for $774,000. Q- Video manufactures specialty cables for computer monitors. On that date, Q-Video reported assets and liabilities with book values of $2.2 million and $658,000, respectively. A customer list compiled by Q-Video had an appraised value of $360,000, although it was not recorded on its books. The expected remaining life of the customer list was five years with straight-line amortization deemed appropriate. Any remaining excess cost was not identifiable with any particular asset and thus was considered goodwill. Q-Video generated net income of $316,000 in 2023 and a net loss of $130,000 in 2024. In each of these two years, Q-Video declared and paid a cash dividend of $18,000 to its stockholders. During 2023, Q-Video sold inventory that had an original cost of $84,000 to Stream for $150,000. Of this balance, $75,000 was resold to outsiders during 2023, and the…

On January 1, 2017, Stream Company acquired 30 percent of the outstanding voting shares of Q-Video, Inc., for $770,000. Q-Video manufactures specialty cables for computer monitors. On that date, Q-Video reported assets and liabilities with book values of $1.9 million and $700,000, respectively. A customer list compiled by Q-Video had an appraised value of $300,000, although it was not recorded on its books. The expected remaining life of the customer list was five years with straight-line amortization deemed appropriate. Any remaining excess cost was not identifiable with any particular asset and thus was considered goodwill.Q-Video generated net income of $250,000 in 2017 and a net loss of $100,000 in 2018. In each of these two years, Q-Video declared and paid a cash dividend of $15,000 to its stockholders.During 2017, Q-Video sold inventory that had an original cost of $100,000 to Stream for $160,000. Of this balance, $80,000 was resold to outsiders during 2017, and the remainder was…