1. On January 1, Puckett Company paid $1.71 million for 57,000 shares of Harrisons voting common stock, which represents a 40 percent investment. No allocation to goodwill or other specific account was made. Significant influence over Harrison is achieved by this acquisition and so Puckett applies the equity method. Harrison distributed a dividend of $3 per share during the year and reported net income of $590,000. What is the balance in the Investment in Harrison account found in Pucketts financial records as of December 31?

$1,775,000.

$1,877,600.

$2,129,000.

$1,946,000.

2. In January 2014, Domingo, Inc., acquired 20 percent of the outstanding common stock of Martes, Inc., for $889,000. This investment gave Domingo the ability to exercise significant influence over Martes. Martess assets on that date were recorded at $4,808,000 with liabilities of $968,000. Any excess of cost over book value of the investment was attributed to a patent having a remaining useful life of 10 years.

In 2014, Martes reported net income of $225,000. In 2015, Martes reported net income of $276,250. Dividends of $104,000 were declared in each of these two years. What is the equity method balance of Domingos Investment in Martes, Inc., at December 31, 2015?

$923,450.

$1,060,350.

$1,048,250.

$947,650.

3. Franklin purchases 40 percent of Johnson Company on January 1 for $558,800. Although Franklin did not use it, this acquisition gave Franklin the ability to apply significant influence to Johnsons operating and financing policies. Johnson reports assets on that date of $1,556,000 with liabilities of $578,000. One building with a seven year life is undervalued on Johnsons books by $206,500. Also, Johnsons book value for its trademark (10-year life) is undervalued by $212,500. During the year, Johnson reports net income of $103,000 while declaring dividends of $40,000. What is the Investment in Johnson Company balance (equity method) in Franklins financial records as of December 31?

$575,500.

$584,000.

$563,700.

$604,900.