On January 1, 2012, Dawson, Incorporated, paid $100,000 for a 30% interest in Sacco Corporation. This investee had assets with a book value of $550,000 and liabilities of $300,000. A patent held by Sacco having a book value of $10,000 was actually worth $40,000 with a six year remaining life. Any goodwill associated with this acquisition is considered to have an indefinite life. During 2012, Sacco reported income of $50,000 and paid dividends of $20,000 while in 2013 it reported income of $75,000 and dividends of $30,000. Assume Dawson has the ability to significantly influence the operations of Sacco.

The equity in income of Sacco for 2013, is

	$22,500.
	$21,000.
	$12,000.
	$13,500.
	$75,000.

Answer rating: 100% (QA)

The amount allocated to goodwill on January 1 2012 is calculated below The inv... View the full answer