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Home / Questions / Question On January 1, 2017, Alison, Inc., paid $70,800 for a 40 percent interest in Holis...

Question On January 1, 2017, Alison, Inc., paid $70,800 for a 40 percent interest in Holister Corpor

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 2018, it had income of $53,700 and dividends of $20,000. During 2018, the fair value of Allison's investment in Holister had risen from $84,080 to $88,960. 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? Investment in Holister Investment income

 

Apr 22 2020 View more View Less

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