On January 1, 2010, Alison, Inc., paid \($60,000\) for a 40 percent interest in Holister Corporation’s common stock. 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 remaining life. Any further excess cost associated with this acquisition was attributed to goodwill. During 2010, Holister earned income of \($30,000\) and paid dividends of \($10,000.\) In 2011, it had income of \($50,000\) and dividends of \($15,000.\) During 2011, the fair value of Allison’s investment in Holister had risen from \($68,000\) to \($75,000\).

a. Assuming Alison uses the equity method, what balance should appear in the Investment in Holister account as of December 31, 2011?

b. Assuming Alison uses the fair-value option, what income from the investment in Holister should be reported for 2011?