Petal Company acquired all of the stock of Stem Company on January 1, 2019 for...
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Petal Company acquired all of the stock of Stem Company on January 1, 2019 for $1,000,000 cash. There were no combination or stock issuance costs. Fair market value differed from book value for two items: item book value fair value Land $175,000 $275,000 $200,000 $300,000 Buildings 20-year life) In 2019, Stem Company reported income of $20,000 and paid dividends of $7,000 a. Calculate the annual amortization of any difference between fair market value and Stem's book values b. Then, indicate how much investment income Petal Company would recognize in 2019 under each of the following methods: Initial Value Method Partial Equity Method Equity Method
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