LooseLeaf for Advanced Accounting (Irwin Accounting) - Standalone book
13th Edition
ISBN: 9781259444951
Author: Joe Ben Hoyle, Thomas Schaefer, Timothy Doupnik
Publisher: McGraw-Hill Education
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Chapter 1, Problem 16P
On January 1, 2017, Alison, Inc., paid $60,000 for a 40 percent interest in Holister Corporation’s common stock. This investee had assets with a book value of $200,000 and liabilities of $75,000. A patent held by Holister having a $5,000 book value was actually worth $20,000. This patent had a six-year remaining life. Any further excess cost associated with this acquisition was attributed to
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?
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On January 1, 2017, Alison, Inc., paid $800,000 for a 40 percent interest in Hollister Corporation’s common stock. This investee had assets with a book value of $300,000 and liabilities of $175,000. A patent held by Hollister having a $5,000 book value was worth $20,000. This patent had a six-year remaining life. Any further excess cost associated with this acquisition was attributed to goodwill. During 2017, Hollister earned income of $30,000 and declared and paid dividends of $10,000. In 2018, it had income of $50,000 and dividends of $15,000. During 2018, the fair value of Allison’s investment in Hollister had risen from $68,000 to $75,000.
Assuming Alison uses the equity method, what balance should appear in the Investment in Hollister account as of December 31, 2018?
Assuming Alison uses fair-value accounting, what income from the investment in Hollister should be reported for 2018?
(Acquisition price is $100,000)
On January 1, 2023, Bertrand Incorporated paid $70,800 for a 40% interest in Chestnut Corporation's common stock. This investee had assets with a book value of $235,000 and liabilities of $95000. A patent held by Chestnut having a book value of $8900 was actually worth $25,400. This patent had a six year remaining life. Any further excess cost associated with this acquisition was attributed to an indefinite-lived asset. During 2023, Chestnut earned income of $45,700 and declared and paid dividends of $20,000. During 2024, the fair value of Bertrand's investment in Chestnut had risen from $84,080 to $88,960. Assuming Bertrand uses the quity method, what balnace should appear in the investment in Chestnut account as of December 31, 2024? Assuming Bertrand uses fair-value accounting, what income from the investment in Chestnut should be reported for 2024?
On January 1, 2020. Alison, Inc., paid $69,500 for a 40 percent interest in Holister Corporation's common stock. This investee had
assets with a book value of $219,500 and liabilities of $95,500. A patent held by Holister having a $12,000 book value was actually
worth $31,500. This patent had a six-year remaining life. Any further excess cost associated with this acquisition was attributed to
goodwill. During 2020, Holister earned income of $32,500 and declared and paid dividends of $11,000. In 2021, it had income of
$71,500 and dividends of $16,000. During 2021, the fair value of Allison's investment in Holister had risen from $79,200 to $89,900.
a. Assuming Alison uses the equity method, what balance should appear in the Investment in Holister account as of December 31,
2021?
b. Assuming Alison uses fair-value accounting, what income from the investment in Holister should be reported for 2021?
a.
Investment in Holister
b.
Investment income
Chapter 1 Solutions
LooseLeaf for Advanced Accounting (Irwin Accounting) - Standalone book
Ch. 1 - A company acquires a rather large investment in...Ch. 1 - What accounting treatments are appropriate for...Ch. 1 - Prob. 3QCh. 1 - Why does the equity method record dividends from...Ch. 1 - Prob. 5QCh. 1 - Smith. Inc., has maintained an ownership interest...Ch. 1 - Prob. 7QCh. 1 - Because of the acquisition of additional investee...Ch. 1 - Prob. 9QCh. 1 - Prob. 10Q
Ch. 1 - Prob. 11QCh. 1 - In a stock acquisition accounted for by the equity...Ch. 1 - Prob. 13QCh. 1 - What is the difference between downstream and...Ch. 1 - Prob. 15QCh. 1 - Prob. 16QCh. 1 - What is the fair-value option for reporting equity...Ch. 1 - When an investor uses the equity method to account...Ch. 1 - Which of the following does not indicate an...Ch. 1 - Prob. 3PCh. 1 - Under fair-value accounting for an equity...Ch. 1 - When an equity method investment account is...Ch. 1 - Prob. 6PCh. 1 - In January 2017, Domingo, Inc., acquired 20...Ch. 1 - Prob. 8PCh. 1 - Evan Company reports net income of 140,000 each...Ch. 1 - Perez, Inc., applies the equity method for its 25...Ch. 1 - Prob. 11PCh. 1 - Alex, Inc., buys 40 percent of Steinbart Company...Ch. 1 - Prob. 13PCh. 1 - Prob. 14PCh. 1 - Prob. 15PCh. 1 - On January 1, 2017, Alison, Inc., paid 60,000 for...Ch. 1 - Prob. 17PCh. 1 - Prob. 18PCh. 1 - Prob. 19PCh. 1 - Prob. 20PCh. 1 - Prob. 21PCh. 1 - Echo, Inc., purchased 10 percent of ProForm...Ch. 1 - Prob. 23PCh. 1 - Prob. 24PCh. 1 - Prob. 25PCh. 1 - Prob. 26PCh. 1 - Belden, Inc. acquires 30 percent of the...Ch. 1 - Prob. 28PCh. 1 - Prob. 29PCh. 1 - On July 1, 2016, Killearn Company acquired 88,000...Ch. 1 - Prob. 31PCh. 1 - On January 1, 2017, Stream Company acquired 30...Ch. 1 - EXCEL CASE 1 On January 1, 2018, Acme Co. is...Ch. 1 - Access The Coca-Cola Companys SEC 10-K filing at...Ch. 1 - Prob. 4DYSCh. 1 - Prob. 5DYS
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