Answer:
It will be valued at:
investment 70,000
goodwilll 1,000
patent 4,000
total 75,000
Explanation:
first we calcualte the equity of the company:
200,000 - 75,000 = 125,000 equity
then we calcualtethe investment proportion:
125,000 x 0.4 = 50,000 investment
15,000 x 0.4 = 6,000 patent
goodwill: 4,000 (60,000 - 56,000)
2017
income: 30,000 x 0.4 = 12,000
dividneds: 10,000 x 0.4 = (4,000)
amortization on patent
6,000 / 6 = 1,000 per year
2018
income: 50,000 x 0.4 = 20,000
dividneds: 15,000 x 0.4 = ( 6,000 )
amortization on patent: ( 1,000 )
50,000 + 12,000 - 4,000 - 1,000 + 20,000 - 6,000 - 1,000 = 70,000
then we add the patent and the goodwill
70,000 + 4,000 + 4,000 = 78,000
and wecheck for impairment:
as the fair value is 75,000 we decrease goodwill
