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ACC - On January 1, 2014, Alison, Inc.,




Question;On January 1, 2014, Alison, Inc., paid $85,700 for a 40 percent interest in Holister Corporation?s common stock. This investee had assets with a book value of $256,000 and liabilities of $83,500. A patent held by Holister having a $9,800 book value was actually worth $20,300. 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 $48,000 and declared and paid dividends of $16,000. In 2015, it had income of $52,000 and dividends of $21,000. During 2015, the fair value of Allison?s investment in Holister had risen from $99,100 to $105,100.a. Assuming Alison uses the equity method, what balance should appear in;the Investment in Hollister 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?


Paper#40667 | Written in 18-Jul-2015

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