On January 1, 2020, Alison, Inc., paid $91,300 for a 40 percent interest in Holister Corporation's...
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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. a. Assuming Alison uses the equity method, what balance should appear in the Investment in Holister account as of December 31, 2021? b. Assuming Alison uses fair-value accounting, what income from the investment in Holister should be reported for 2021? a. Investment in Holister $ 113,660 b. Investment income 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. a. Assuming Alison uses the equity method, what balance should appear in the Investment in Holister account as of December 31, 2021? b. Assuming Alison uses fair-value accounting, what income from the investment in Holister should be reported for 2021? a. Investment in Holister $ 113,660 b. Investment income
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a To determine the balance in the Investment in Holister account as of December 31 2021 we need to consider the equity method of accounting Under the ... View the full answer
Related Book For
Advanced Accounting
ISBN: 978-0077862220
12th edition
Authors: Joe Ben Hoyle, Thomas Schaefer, Timothy Doupnik
Posted Date:
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