Matthew, Incorporated, owns percent of the outstanding stock of Lindman Company and has the ability to significantly influence the
investee's operations and decision making. On January the balance in the Investment in Lindman account is $
Amortization associated with this acquisition is $ per year. In Lindman earns an income of $ and declares cash
dividends of $ Previously, in Lindman had sold inventory costing $ to Matthew for $ Matthew consumed
all but percent of this merchandise during and used the rest during Lindman sold additional inventory costing $
to Matthew for $ in Matthew did not consume percent of these purchases from Lindman until
Required:
a What amount of equity method income would Matthew recognize in from its ownership interest in Lindman?
b What is the equity method balance in the Investment in Lindman account at the end of
