on december 31, 2019, akron, inc., purchased 5 percent of zip company’s common shares on the open market in exchange for $16,000. on december 31, 2020, akron, inc., acquires an additional 25 percent of zip company’s outstanding common stock for $95,000. during the next two years, the following information is available for zip company: incomedividends declaredcommon stockfair value (12/31)2019 $320,0002020$75,000$7,000380,000202188,00015,000480,000 at december 31, 2020, zip reports a net book value of $290,000. akron attributed any excess of its 30 percent share of zip's fair over book value to its share of zip's franchise agreements. the franchise agreements had a remaining life of 10 years at december 31, 2020. assume akron applies the equity method to its investment in zip account:what amount of equity income should akron report for 2021?on akron's december 31, 2021, balance sheet, what amount is reported for the investment in zip account? assume akron uses fair-value accounting for its investment in zip account:what amount of income from its investment in zip should akron report for 2021?on akron's december 31, 2021, balance sheet, what amount is reported for the investment in zip account?

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13-09-2022
Business

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on december 31, 2019, akron, inc., purchased 5 percent of zip company’s common shares on the open market in exchange for $16,000. on december 31, 2020, akron, inc., acquires an additional 25 percent of zip company’s outstanding common stock for $95,000. during the next two years, the following information is available for zip company: incomedividends declaredcommon stockfair value (12/31)2019 $320,0002020$75,000$7,000380,000202188,00015,000480,000 at december 31, 2020, zip reports a net book value of $290,000. akron attributed any excess of its 30 percent share of zip's fair over book value to its share of zip's franchise agreements. the franchise agreements had a remaining life of 10 years at december 31, 2020. assume akron applies the equity method to its investment in zip account:what amount of equity income should akron report for 2021?on akron's december 31, 2021, balance sheet, what amount is reported for the investment in zip account? assume akron uses fair-value accounting for its investment in zip account:what amount of income from its investment in zip should akron report for 2021?on akron's december 31, 2021, balance sheet, what amount is reported for the investment in zip account?

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khuranashilpa76 khuranashilpa76 · Answer 1 · 2022-09-18T02:34:51-04:00

Investing is an effective way to put your money to work and potentially build wealth. Smart investing may allow your money to outpace inflation and increase in value. The greater growth potential of investing is primarily due to the power of compounding and the risk-return tradeoff.

An investment is an asset or item acquired with the goal of generating income or appreciation. Appreciation refers to an increase in the value of an asset over time. When an individual purchases a good as an investment, the intent is not to consume the good but rather to use it in the future to create wealth.

purchase price of 25%interest

carrying amountof 5%interrest ($380*5%)

The total fair value of As investment of the Z account

Net book value($290.000*30%)

Franchise agreement

The remaining life of the franchise agreement

annual amortization($27000-10mears)

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