Reference no: EM132497902
Point 1: On January 1, 2018, Roland, Inc., paid $200,000 for a 40% interest in Holt Corp.'s common stock. This investee had assets with a book value of $250,000 and liabilities of $10,000. A patent held by Holt having a $5,000 book value was actually worth $25,000. A building held by Holt had a book value of $70,000 and a fair value of $120,000. The patent had a remaining useful life of 5 years while the building had a 10 year remaining life. Any further excess cost was associated with goodwill. During 2018, Holt earned income of $60,000 and paid dividends of $8,000. During 2019, it had income of $80,000 and dividends of $12,000. During 2019, the fair value of Roland's investment in Holt had risen from $210,000 to $230,000.
Question 1: Assuming Roland uses fair-value accounting, what is the value of the investment account at the end of 2018
Question 2: Assuming Roland uses fair-value accounting, what is the value of the investment account at the end of 2019?
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