Finance Problem
On January 1, 2020, Skyline Co. paid $200,000 for a 40% interest in Allen Industries. Allen Industries' stockholders' equity amounted to $300,000 on that date. The excess of purchase price over book values was due to an unrecorded patent valued at $200,000 with a 5-year life. During 2020, Allen Industries reported income of $80,000 and paid dividends of $18,000. During 2021, it reported income of $90,000 and dividends of $48,000.
Assume that Skyline Co. has significant influence over the operations of Allen Industries.
Required:
o What is the amount of goodwill?
o What is Equity Income for 2020?
o What is the balance in the Equity Investment account at December 31, 2020?
o What is Equity Income for 2021?
o What is the balance in the Equity Investment account at December 31, 2021?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.