X 0 Mail - baes2 Assignment -Chap x 201 x C On html signment- Chapter 1 Problem

Question

X 0 Mail - baes2 Assignment -Chap x 201 x C On html signment- Chapter 1 Problem 1-16 (LO 1-3, 1-4, 1-7) On January 1, 2017, Alison, Inc., paid $73,900 for a 40 percent interest in Holister Corporation's common stock. This investee hac assets with a book value of $251.500 and liabilities of $122.500. A patent held by Holister hav worth $30.600. T goodwill A patent held by Holister having a $8,100 book value was actual his patent had a six-year remaining life. Any further excess cost associated with this acquisition was attributed to During 2017, Holister earned income of $49.500 and declared and paid dividends of $17000. In 2018, it had income o and dividends of $22.000. During 2018, the fair value of Alison's investment in Holister had risen from $88,700 to $94,900 a. Assuming Alison uses the equity method what balance should appear in the Inveéstnent in Holister account as of December 31 2018? b. Assuming Alison uses fair-value accounting. what income from the investment in Holister should be reported for 20183

Explanation / Answer

Excess Payment for Acquisition 22300 73900 - (251500-122500)*.4 Value of Patent in excess of book value 9000 (30600-8100)*.4 Goodwill 13300 Amortization of patent each year 1500 a Balance of Equity Investment Purchase Price 73900 Add: Accrua income for 2017 19800 Less: Dividend received 6800 Less: Amortization 1500 Invest balance on 31/12/2017 85400 Add: Accrua income for 2018 25800 Less: Dividend received 8800 Less: Amortization 1500 Investment balance on 31/12/2018 100900 Answer b Investment income in 2018: Share in dividend 8800 Increase in fair value 6200 Investment income in 2018 15000

Related Questions

Navigate

• Browse (All)
• Browse X
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.