On January 1, 2008, Alison, Inc., paid $60,000 for a 40 percent interest in Holister Corporation. This
Question:
On January 1, 2008, Alison, Inc., paid $60,000 for a 40 percent interest in Holister Corporation. This investee had assets with a book value of $200,000 and liabilities of $75,000. A patent held by Holister having a $5,000 book value was actually worth $20,000. This patent had a six-year re¬ maining life. Any further excess cost associated with this acquisition was attributed to goodwill. During 2008, Holister earned income of $30,000 and paid dividends of $10,000. In 2009, it had in¬ come of $50,000 and dividends of $15,000.
Assuming that Alison has the ability to significantly influence Holister’s operations and uses the eq¬ uity method, what balance should appear in the Investment in Holister account as ofDecember 31,2009?
Step by Step Answer:
Advanced Accounting
ISBN: 9780073379456
9th Edition
Authors: Joe Ben Hoyle, Timothy S. Doupnik, Thomas F. Schaefer, Oe Ben Hoyle