Homework Help is Here – Start Your Trial Now!
Business
Accounting
On January 1, 2014, Alison, Inc., paid $77,000 for a 40 percent interest in Holister Corporation's common stock. This investee had assets with a book value of $223,000 and liabilities of $94,500. A patent held by Holister having a $10,800 book value was actually worth $52,800. 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 $48,700 and declared and paid dividends of $16,000. In 2015, it had income of $74,500 and dividends of $21,000. During 2015, the fair value of Allison's investment in Holister had risen from $90,580 to $100,180. 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

On January 1, 2014, Alison, Inc., paid $77,000 for a 40 percent interest in Holister Corporation's common stock. This investee had assets with a book value of $223,000 and liabilities of $94,500. A patent held by Holister having a $10,800 book value was actually worth $52,800. 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 $48,700 and declared and paid dividends of $16,000. In 2015, it had income of $74,500 and dividends of $21,000. During 2015, the fair value of Allison's investment in Holister had risen from $90,580 to $100,180. 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

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
See similar textbooks
icon
Related questions
Question

Dog

On January 1, 2014, Alison, Inc., paid $77,000 for a 40 percent interest in Holister Corporation's common stock. This investee had assets with a book value of $223,000 and liabilities of $94,500. A patent held by Holister having a $10,800 book value was actually worth $52,800. 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 $48,700 and declared and paid dividends of $16,000. In 2015, it had income of $74,500 and dividends of $21,000. During 2015, the fair value of Allison's investment in Holister had risen from $90,580 to $100,180. 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
Transcribed Image Text:On January 1, 2014, Alison, Inc., paid $77,000 for a 40 percent interest in Holister Corporation's common stock. This investee had assets with a book value of $223,000 and liabilities of $94,500. A patent held by Holister having a $10,800 book value was actually worth $52,800. 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 $48,700 and declared and paid dividends of $16,000. In 2015, it had income of $74,500 and dividends of $21,000. During 2015, the fair value of Allison's investment in Holister had risen from $90,580 to $100,180. 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
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 3 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Accounting for Intangible assets
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS