On January 1, 2015, Aly Inc., paid $83,800 for a 40 percent interest in Holy Corporation’s...

On January 1, 2015, Aly Inc., paid $83,800 for a 40 percent interest in Holy Corporation’s common stock. This investee had assets with a book value of $290,500 and liabilities of $117,000.

A patent held by Holy having a $13,600 book value was actually worth $31,600. This patent had a six-year remaining life. Any further excess cost associated with this acquisition was attributed to goodwill.

During 2015, Holy earned income of $40,700 and dividends of $14,000 and the fair value of Aly investment in Holy on December 31, 2015 was $95,380.

During 2016, Holy had income of $70,000 and dividends of $19,000 and the fair value of Aly investment in Holy on December 31, 2016 was $106,180.

a.Prepare all of the journal entries for Aly, Inc. regarding their investment in Holy Corporation stock for 2015.

b. What balance should appear in the Investment in Holy account as of December 31, 2015?

c. Prepare all of the journal entries for Aly, Inc. regarding their investment in Holy Corporation stock for 2016.

d. What balance should appear in the Investment in Holy account as of December 31, 2016

Requiement 2: Assuming Aly uses the fair-value method, do the following:

Prepare all of the journal entries for Aly regarding their investment in Holy Corporation stock for 2015

b. What balance should appear in the Investment in Holy account as of December 31, 2015

c. Prepare all of the journal entries for Aly regarding their investment in Holister Corporation stock for 2016.

d. What balance should appear in the Investment in Holy account as of December 31, 2016?

Solutions

Expert Solution

ekkarill92 answered 1 year ago

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