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Problem 1-25 This template can be used to complete the identified problem. Note that ?? indicates you should fill in an appropriate
"The question is below, but I am attaching a template. It is the 1-27 tab on the spreadsheet. Thanks, I'm re-submitting this with just the first question.On July 1, 2007, Gibson Company acquired 75,000 of the outstanding shares of Miller Company for $12 per share. This acquisition gave Gibson a 35 percent ownership of Miller and allowed Gibson to significantly influence the investee's decisions.As of July 1, 2007, the investee had assets with a book value of $2 million and liabilities of $400,000. At the time, Miller held equipment appraised at $150,000 above book value; it was considered to have a seven-year remaining life with no salvage value. Miller also held a copyright with a five-year remaining life on its books that was undervalued by $650,000. Any remaining excess cost was attributable to goodwill. Depreciation and amortization are computed using the straight-line method. Gibson applies the equity method for its investment in Miller.Miller's policy is to pay a $1 per share cash dividend every April 1 and October 1. Miller's income, earned evenly throughout each year, was $550,000 in 2007, $575,000 in 2008, and $620,000 in 2009.In addition, Gibson sold inventory costing $90,000 to Miller for $150,000 during 2008. Miller resold $80,000 of this inventory during 2008 and the remaining $70,000 during 2009.a. Prepare a schedule computing the equity income to be recognized by Gibson during each of these years.
