On January 1, 2017, Figland Company purchased for cash 40% of Irene Company's 300,000 shares of voting

Question:

On January 1, 2017, Figland Company purchased for cash 40% of Irene Company's 300,000 shares of voting for $1,800,000. At the time, 40% of the book value of the underlying equity in Irene's net assets was $1,400,000; $50,000 of the excess was attributed to the excess of fair value over book value of inventory, which Irene accounts for using the first-in, first-out (FIFO) inventory method; and $150,000 was attributed to undervaluation of depreciable assets with an average remaining life of 10 years. The remainder was attributed to implicit goodwill.
As a result of this transaction, Figland can exercise significant influence over Irene's operating and financial policies. Irene's net income for the year ended December 31, 2017, was $600,000. During 2017, Irene paid $325,000 in dividends to its stockholders.
Required:
1. How much income would Figland report on its 2017 income statement from its investment in Irene?
2. What would be the balance in the Investment in Irene Company account on December 31, 2017?
Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on...