Business, 19.10.2021 01:00 locomexicano03

On January 1, 2020, Alison, Inc., paid $72,000 for a 40 percent interest in Holister Corporation’s common stock. This investee had assets with a book value of $260,500 and liabilities of $115,500. A patent held by Holister having a $10,200 book value was actually worth $23,700. 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 $39,000 and declared and paid dividends of $13,000. In 2021, it had income of $61,500 and dividends of $18,000. During 2021, the fair value of Allison’s investment in Holister had risen from $84,500 to $92,700. Required:
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?

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On January 1, 2020, Alison, Inc., paid $72,000 for a 40 percent interest in Holister Corporation’s c...

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