1.On January 1, 2020, Alison, Inc., paid $91,300 for a 40 percent interest in Holister Corporation's common stock. This investee had assets with a book value of $243,500 and liabilities of $87,500. A patent held by Holister having a $6,000 book value was actually worth $60,000. This patent had a six-year remaining life. Any further excess cost associated with this acquisition was attributed to goodwill. During 2020, Holister earned income of $35,200 and declared and paid dividends of $12,000. In 2021, it had income of $54,200 and dividends of $17,000. During 2021, the fair value of Allison's investment in Holister had risen from $98,780 to $102,860.

1. Assuming Alison uses the equity method, what balance should appear in the Investment in Holister account as of December 31, 2021?
2. Assuming Alison uses fair-value accounting, what income from the investment in Holister should be reported for 2021?

a. Investment in Hollister ___________

b. Investment income ___________

2.On January 1, 2021, Alamar Corporation acquired a 35 percent interest in Burks, Inc., for $235,000. On that date, Burks's balance sheet disclosed net assets with both a fair and book value of $347,000. During 2021, Burks reported net income of $79,000 and declared and paid cash dividends of $24,000. Alamar sold inventory costing $22,000 to Burks during 2021 for $44,000. Burks used all of this merchandise in its operations during 2021.

Prepare all of Alamar's 2021 journal entries to apply the equity method to this investment.(If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Record the acquisition of a 35 percent interest in Burks.

Record the 35 percent income earned by Alamar from this investment.

Record the investee dividend declaration.

Record the collection of dividend from investee.

3.Camille, Inc., sold $130,000 in inventory to Eckerle Company during 2020 for $250,000. Eckerle resold $89,000 of this merchandise in 2020 with the remainder to be disposed of during 2021. Assuming that Camille owns 20 percent of Eckerle and applies the equity method, what journal entry is recorded at the end of 2020 to defer the intra-entity gross profit?(If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations.)

Record the entry at the end of 2020 to defer unrealized gross profit.

4.BuyCo, Inc., holds 25 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 $10,200 per year. For 2020, Marqueen reported earnings of $101,000 and declares cash dividends of $30,000. During that year, Marqueen acquired inventory for $40,000, which it then sold to BuyCo for $80,000. At the end of 2020, BuyCo continued to hold merchandise with a transfer price of $26,000.

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?

(For all requirements, do not round intermediate calculations.)

BuyCo, Inc., holds 25 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 $10,200 per year. For 2020, Marqueen reported earnings of $101,000 and declares cash dividends of $30,000. During that year, Marqueen acquired inventory for $40,000, which it then sold to BuyCo for $80,000. At the end of 2020, BuyCo continued to hold merchandise with a transfer price of $26,000.

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?

(For all requirements, do not round intermediate calculations.)

a. Equity in investee income _________________

b. Equity accrual for 2021 will be (Increase or Decrease) by _____________

c. If BuyCo had sold the inventory to Marqueen, would your answers above change? (Yes or No)