Homework Answers
Solution:
|
PART-1 |
WORKING |
|
|
Acquisition price |
70,800 |
|
|
Book value-assets - liabilities |
56000 |
40% * (235000-95000) |
|
Excess payment |
14,800 |
|
|
Value of patent in excess of book value |
6600 |
40% * (25,400 - 8,900) |
|
Goodwill |
8,200 |
|
|
Patent (6600/6) |
1100 |
|
|
Goodwill |
0 |
|
|
Annual amortization |
1100 |
|
|
Acquisition price |
70,800 |
|
|
Basic equity accrual 2017 |
18280 |
45700*40% |
|
Dividends—2017 |
-6000 |
15000*40% |
|
Annual amortization |
-1100 |
|
|
Investment in Holister, 12/31/17 |
81,980 |
|
|
Basic equity accrual 2018 |
21480 |
53700*40% |
|
Dividends—2018 |
-8000 |
20000*40% |
|
Annual amortization |
-1100 |
|
|
Investment in Holister, 12/31/18 |
94,360 |
|
|
PART-2 |
||
|
Dividend income |
8000 |
20000*40% |
|
Increase in fair value |
4880 |
88960-84080 |
|
Investment income under fair value option 2018 |
12880 |
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