Vaughn Manufacturing: Crunching the Numbers
What were the key components included in Vaughn Manufacturing's net income computation for the year ended 12/31/21?
Key Components of Net Income Computation:
The key components included in Vaughn Manufacturing's net income computation for the year ended 12/31/21 were:
- Depreciation expense of $59,600
- Amortization of a patent totaling $32,200
- Income from an investment in common stock of Ivanhoe Company amounting to $48,500
- Amortization of a bond discount worth $12,700
- Dividend payment of $79,000
Explanation:
Vaughn Manufacturing reported a net income of $471,000 for the year ended 12/31/21. This figure was derived after taking into account various components such as depreciation expense, amortization of a patent, income from an investment in common stock, and amortization of a bond discount.
Depreciation expense and amortization of a patent are non-cash items that were factored into the computation. The income from an investment in common stock of Ivanhoe Company was accounted for under the equity method, while the amortization of a bond discount was also considered.
In addition to these components, Vaughn Manufacturing also paid a dividend of $79,000 during the year. All of these factors were considered to arrive at the reported net income figure of $471,000.