At December 31, 2023, Zip reports a net book value of $294,000. Akron attributed any excess of its 30 percent share of Zip's fair over book value to its share of Zip's franchise agreements. The franchise agreements had a remaining life of 10 years at December 31, 2023. Required: a. Assume Akron applies the equity method to its Investment in Zip account: 1. What amount of equity income should Akron report for 2024? 2. On Akron's December 31, 2024, balance sheet, what amount is reported for the Investment in Zip account? b. Assume Akron uses fair-value accounting for its Investment in Zip account: 1. What amount of income from its investment in Zip should Akron report for 2024? 2. On Akron's December 31, 2024, balance sheet, what amount is reported for the Investment in Zip account? Answer is complete but not entirely correct. a1. Equity income $ 25,620 a2. Investment in Zip account $ 111,250x b1. Reported income $ 108,800 b2 Investment in Zip account I$ 143.100
At December 31, 2023, Zip reports a net book value of $294,000. Akron attributed any excess of its 30 percent share of Zip's fair over book value to its share of Zip's franchise agreements. The franchise agreements had a remaining life of 10 years at December 31, 2023. Required: a. Assume Akron applies the equity method to its Investment in Zip account: 1. What amount of equity income should Akron report for 2024? 2. On Akron's December 31, 2024, balance sheet, what amount is reported for the Investment in Zip account? b. Assume Akron uses fair-value accounting for its Investment in Zip account: 1. What amount of income from its investment in Zip should Akron report for 2024? 2. On Akron's December 31, 2024, balance sheet, what amount is reported for the Investment in Zip account? Answer is complete but not entirely correct. a1. Equity income $ 25,620 a2. Investment in Zip account $ 111,250x b1. Reported income $ 108,800 b2 Investment in Zip account I$ 143.100
Chapter16: Accounting Periods And Methods
Section: Chapter Questions
Problem 15DQ
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Transcribed Image Text:At December 31, 2023, Zip reports a net book value of $294,000. Akron attributed any excess of its 30 percent share of Zip's fair over
book value to its share of Zip's franchise agreements. The franchise agreements had a remaining life of 10 years at December 31,
2023.
Required:
a. Assume Akron applies the equity method to its Investment in Zip account:
1. What amount of equity income should Akron report for 2024?
2. On Akron's December 31, 2024, balance sheet, what amount is reported for the Investment in Zip account?
b. Assume Akron uses fair-value accounting for its Investment in Zip account:
1. What amount of income from its investment in Zip should Akron report for 2024?
2. On Akron's December 31, 2024, balance sheet, what amount is reported for the Investment in Zip account?
Answer is complete but not entirely correct.
a1. Equity income
$
25,620
a2. Investment in Zip account
$
111,250x
b1. Reported income
$ 108,800
b2 Investment in Zip account
I$
143.100
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