Question
In: Accounting
On January 1, 2017, Alison, Inc., paid $83,600 for a 40 percent interest in Holister Corporation’s...
On January 1, 2017, Alison, Inc., paid $83,600 for a 40 percent interest in Holister Corporation’s common stock. This investee had assets with a book value of $279,500 and liabilities of $118,500. A patent held by Holister having a $6,800 book value was actually worth $42,800. This patent had a six-year remaining life. Any further excess cost associated with this acquisition was attributed to goodwill. During 2017, Holister earned income of $33,500 and declared and paid dividends of $11,000. In 2018, it had income of $68,000 and dividends of $16,000. During 2018, the fair value of Allison’s investment in Holister had risen from $92,900 to $103,200.
a. Assuming Alison uses the equity method, what balance should appear in the Investment in Holister account as of December 31, 2018?
b. Assuming Alison uses fair-value accounting, what income from the investment in Holister should be reported for 2018?
Solutions
ekkarill92 answered 1 year agoRelated Solutions
On January 1, 2017, Alison, Inc., paid $85,700 for a 40 percent interest in Holister Corporation’s...
On January 1, 2017, Alison, Inc., paid $85,700 for a 40 percent
interest in Holister Corporation’s common stock. This investee had
assets with a book value of $256,000 and liabilities of $83,500. A
patent held by Holister having a $9,800 book value was actually
worth $20,300. This patent had a six-year remaining life. Any
further excess cost associated with this acquisition was attributed
to goodwill. During 2017, Holister earned income of $48,000 and
declared and paid dividends of $16,000. In...
On January 1, 2017, Alison, Inc., paid $90,400 for a 40 percent interest in Holister Corporation’s...
On January 1, 2017, Alison, Inc., paid $90,400 for a 40 percent
interest in Holister Corporation’s common stock. This investee had
assets with a book value of $248,500 and liabilities of $93,500. A
patent held by Holister having a $12,300 book value was actually
worth $55,800. This patent had a six-year remaining life. Any
further excess cost associated with this acquisition was attributed
to goodwill. During 2017, Holister earned income of $52,500 and
declared and paid dividends of $18,000. In...
On January 1, 2017, Alison, Inc., paid $60,000 for a 40 percent interest in Holister Corporation’s...
On January 1, 2017, Alison, Inc., paid $60,000 for a 40 percent
interest in Holister Corporation’s common stock. This investee had
assets with a book value of $200,000 and liabilities of $75,000. A
patent held by Holister having a $5,000 book value was actually
worth $20,000. This patent had a six-year remaining life. Any
further excess cost associated with this acquisition was attributed
to goodwill. During 2017, Holister earned income of $30,000 and
declared and paid dividends of $10,000. In...
On January 1, 2017, Alison, Inc., paid $70,800 for a 40 percent interest in Holister Corporation’s...
On January 1, 2017, Alison, Inc., paid $70,800 for a 40 percent
interest in Holister Corporation’s common stock. This investee had
assets with a book value of $235,000 and liabilities of $95,000. A
patent held by Holister having a $8,900 book value was actually
worth $25,400. This patent had a six-year remaining life. Any
further excess cost associated with this acquisition was attributed
to goodwill. During 2017, Holister earned income of $45,700 and
declared and paid dividends of $15,000. In...
On January 1, 2017, Alison, Inc., paid $91,300 for a 40 percent interest in Holister Corporation’s...
On January 1, 2017, 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 2017, Holister earned income of $35,200 and
declared and paid dividends of $12,000. In...
On January 1, 2017, Alison, Inc., paid $83,600 for a 40 percent interest in Holister Corporation’s...
On January 1, 2017, Alison, Inc., paid $83,600 for a 40 percent
interest in Holister Corporation’s common stock. This investee had
assets with a book value of $279,500 and liabilities of $118,500. A
patent held by Holister having a $6,800 book value was actually
worth $42,800. This patent had a six-year remaining life. Any
further excess cost associated with this acquisition was attributed
to goodwill. During 2017, Holister earned income of $33,500 and
declared and paid dividends of $11,000. In...
On January 1, 2017, Alison, Inc., paid $70,500 for a 40 percent interest in Holister Corporation’s...
On January 1, 2017, Alison, Inc., paid $70,500 for a 40 percent
interest in Holister Corporation’s common stock. This investee had
assets with a book value of $224,500 and liabilities of $96,500. A
patent held by Holister having a $13,300 book value was actually
worth $41,800. This patent had a six-year remaining life. Any
further excess cost associated with this acquisition was attributed
to goodwill. During 2017, Holister earned income of $51,500 and
declared and paid dividends of $17,000. In...
On January 1, 2020, Alison, Inc., paid $91,200 for a 40 percent interest in Holister Corporation’s...
On January 1, 2020, Alison, Inc., paid $91,200 for a 40 percent
interest in Holister Corporation’s common stock. This investee had
assets with a book value of $268,500 and liabilities of $98,500. A
patent held by Holister having a $9,500 book value was actually
worth $36,500. 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 $42,200 and
declared and paid dividends of $14,000. In...
On January 1, 2014, Alison, Inc., paid $91,200 for a 40 percent interest in Holister Corporation’s...
On January 1, 2014, Alison, Inc., paid $91,200 for a 40 percent
interest in Holister Corporation’s common stock. This investee had
assets with a book value of $268,500 and liabilities of $98,500. A
patent held by Holister having a $9,500 book value was actually
worth $36,500. This patent had a six-year remaining life. Any
further excess cost associated with this acquisition was attributed
to goodwill. During 2014, Holister earned income of $42,200 and
declared and paid dividends of $14,000. In...
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...
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