Income Dividends

2012 $80,000 $30,000

2013 $100,000 $40,000

In each purchase, Allan attributes any excess of cost over book value to Bellevues franchise agreements that had a remaining life of 10 years at January 1, 2012. Also at January 1, 2012, Bellevue reports a net book value of $280,000. a. Assume Allan applies the equity method to its Investment in Bellevue account: 1. On Allans December 31, 2013, balance sheet, what amount is reported for the Investment in Bellevue account? 2. What amount of equity income should Allan report for 2013? 3. Prepare the January 1, 2013, journal entry to retrospectively adjust the Investment in Bellevue account to the equity method. b. Assume Allan elects the fairvalue reporting option for its investment in Bellevue: 1. On Allans December 31, 2013, balance sheet, what amount is reported for the Investment in Bellevue account? 2. What amount of income from its investment in Bellevue should Allan report for 2013?