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Exercise SA1-4 Equity method, change in interest: Hanson Corporation purchases a10% interest in Novic Company on January 1, 2016, and an additional 15% interest on
Exercise SA1-4 Equity method, change in interest: Hanson Corporation purchases a10% interest in Novic Company on January 1, 2016, and an additional 15% interest on January 1, 2018. These investments cost Hanson Corporation $80,000 and $110,000, respectively.The following stockholders' equities of Novic Company are available: December 31, 2015 December 31, 2017 Common stock ($10 par). . . . . . . . . . . . . . . . . . . .$500,000 $500,000 Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . .250,000 300,000 Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$750,000 $800,000 Any excess of cost over book value on the original investment is attributed to goodwill. Any excess on the second purchase is attributable to equipment with a 4-year life. Novic Company has income of $30,000, $30,000, and $40,000 for 2016, 2017, and 2018, respectively. Novic pays dividends of $0.20 per share in 2017 and 2018.Ignore income tax considerations, and assume equity method adjusting entries
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