BuyCo, Inc., holds 21 percent of the outstanding shares of Marqueen Company and appropriately applies the equity method of accounting. Excess cost amortization (related to a patent) associated with...

BuyCo, Inc., holds 21 percent of the outstanding shares of Marqueen Company and appropriately applies the equity method of accounting. Excess cost amortization (related to a patent) associated with this investment amounts to $11,100 per year. For 2020, Marqueen reported earnings of $111,000 and declares cash dividends of $29,000. During that year, Marqueen acquired inventory for $43,000, which it then sold to BuyCo for $86,000. At the end of 2020, BuyCo continued to hold merchandise with a transfer price of $29,000.

1. 
   

   What Equity in Investee Income should BuyCo report for 2020?

   
   


2. 
   

   How will the intra-entity transfer affect BuyCo’s reporting in 2021?

   
   


3. 
   

   If BuyCo had sold the inventory to Marqueen, would the answers to (a) and (b) have changed?