Reference no: EM131251131
On January 1, 2014, Alison, Inc., paid $82,400 for a 40 percent interest in Holister Corporation’s common stock. This investee had assets with a book value of $244,000 and liabilities of $113,000. A patent held by Holister having a $12,300 book value was actually worth $61,800. 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 $38,500 and declared and paid dividends of $13,000. In 2015, it had income of $67,500 and dividends of $18,000. During 2015, the fair value of Allison’s investment in Holister had risen from $92,000 to $98,300.
a. Assuming Alison uses the equity method, what balance should appear in the Investment in Holister account as of December 31, 2015?
b. Assuming Alison uses fair-value accounting, what income from the investment in Holister should be reported for 2015?
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Assuming alison uses fair-value accounting
: On January 1, 2014, Alison, Inc., paid $82,400 for a 40 percent interest in Holister Corporation’s common stock. This investee had assets with a book value of $244,000 and liabilities of $113,000. Assuming Alison uses the equity method, what balance ..
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