On January 1, 2014, Allan acquires 15 percent of Bellevue?s outstanding common stock for $75,900. Allan classifies the investment as an available-for-sale security and records any unrealized holding gains or losses directly in owners? equity. On January 1, 2015, Allan buys an additional 10 percent of Bellevue for $53,830, providing Allan the ability to significantly influence Bellevue?s decisions.

During the next two years, the following information is available for Bellevue:

	Income	Dividends	Common Stock Fair Value (12/31)
2014	$ 172,000	$72,000	$542,000
2015	210,000	91,000	599,000

In each purchase, Allan attributes any excess of cost over book value to Bellevue?s franchise agreements that had a remaining life of 10 years at January 1, 2014. Also at January 1, 2014, Bellevue reports a net book value of $306,000.

Problem 1-26