Prepare Roller Inc's 2016 income statement, assuming that Larmer is considered to be a joint venture and is reported using the equity method.
The following are the 2016 Income Statements of Roller Corp and Larmer Corp.
Other Information:
During 2016 Larmer paid dividends of $24,000. Roller acquired its 30% stake in
Larmer at a cost of $400,000 and uses the cost method to account for its
investment.
The acquisition differential amortization schedule showed the following write-off
for 2016:
During 2016, Larmer paid rent to Roller in the amount of $12,000, which Roller
has recorded as other income.
In 2015, Roller sold Land to Larmer and recorded a profit of $10,000 on the sale.
During 2016, Larmer sold the land to a third party.
Both companies are subject to a 40% tax rate.
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