Income Dividends
2012 $80,000 $30,000
2013 $100,000 $40,000
In each purchase, Allan attributes any excess of cost over book value to Bellevue's franchise agreements that had a remaining life of 10 years at January 1, 2012. Also at January 1, 2012, Bellevue reports a net book value of $280,000.
a. Assume Allan applies the equity method to its Investment in Bellevue account:
1.On Allan's December 31, 2013, balance sheet, what amount is reported for the Investment in Bellevue account?
2. What amount of equity income should Allan report for 2013?
3. Prepare the January 1, 2013, journal entry to retrospectively adjust the Investment in Bellevue account to the equity method.
b. Assume Allan elects the fair-value reporting option for its investment in Bellevue
1 On Allan's December 31, 2013, balance sheet, what amount is reported for the Investment in Bellevue account?
2. What amount of income from its investment in Bellevue should Allan report for 2013?