Reference no: EM131291884
On January 1, 2014, 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 2014, Holister earned income of $33,500 and declared and paid dividends of $11,000. In 2015, it had income of $68,000 and dividends of $16,000. During 2015, 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, 2015?
Investment in Holister
b. Assuming Alison uses fair-value accounting, what income from the investment in Holister should be reported for 2015?
Investment income
|
Determine amount of net cash flows from operating activies
: The accountant for Erica’s Dress Shop prepared the following cash budget. Erica’s desires to maintain a cash cushion of $17,000 at the end of each month. Funds are assumed to be borrowed and repaid on the last day of each month. Interest is charged a..
|
|
Tax liability for year in each of alternative circumstances
: In 2016, Carson is claimed as a dependednt on his parent's tax return. His parent's ordinary income marginal tax rate is 28%. Carson's parents provided most of his support. What is Carson's tax liability for the year in each of the following alternat..
|
|
Anticipated cash receipts from accounts receivable
: Calino Company developed the following data for the month of August. Credit sales for August are $30,000; for July $40,000; and for June $40,000. 70 percent of credit sales are collected in the month of sale, 15 percent in the following month, and 10..
|
|
Consider another uneven cash flow stream
: Consider another uneven cash flow stream: What is the present (Year 0) value of the cash flow stream if the opportunity cost rate is 8 percent? What is the future (Year 5) value of the cash flow stream if the cash flows are invested in an account tha..
|
|
Uses fair-value accounting and equity method
: On January 1, 2014, 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 ..
|
|
Assuming a linear cost behavior pattern
: At a sales volume of 50 units, the average cost is $410 per unit and the variable cost is $10 per unit. Assuming a linear cost behavior pattern, if sales double to 100 units the average cost will be:
|
|
Calculate mitch charitable contribution deduction-carry over
: Mitch reviewed his cancelled checks and receipts this year for charitable contributions. He has owned the IBM stock and painting since 2005. Calculate Mitch charitable contribution deduction and carry over (if any ) under the following circumstances.
|
|
Projected sales and production in units for second quarter
: Iron city, inc, has projected sales and production in units for the second quarter of the year as follows: Sales: April: 30,000 May: 20,000 June: 25,000 Production: april: 25,000 May: 25,000 June: 30,000 a. cash production costs are budgeted at 5 per..
|
|
Discussed internal controls with management
: Sams CPA discussed internal controls with management and believe that internal control is strong. However Sam still wishes to use a substantive approach. Provide two possible reasons for Sam decision?
|