Question - Puff Co. acquired 40% of Straw, Inc.'s voting common stock on January 2, 2005, for $400,000.
The carrying amount of Straw's net assets at the purchase date totaled $900,000. Fair values equaled carrying amounts for all items except equipment, for which fair values exceeded carrying amounts by $100,000.
The equipment has a five year life. Goodwill, if any, is expected to have a useful life of 10 years. During 2005, Straw reported net income of $150,000. What amount of income from this investment should Puff report in its 2005 income statement?