Question
15. Northridge, Inc., buys 40% of Matador Company on January 1, 2019. for $550,000. The equity method of accounting is to be used, Matador's net
15. Northridge, Inc., buys 40% of Matador Company on January 1, 2019. for $550,000. The equity method of accounting is to be used, Matador's net assets on that date were $1.2 million. Any excess of cost over book value is attributable to a trade name with a 20-year remaining life. Matador immediately begins supplying inventory to Northridge as follows: Amount Held by Northridge
Year Cost to Matador Transfer Price At Year End (at transfer price) 2019 $70,000 $100,000 $25,000 2020 $96,000 $150,000 $45,000 Inventory held at the end of one year by Northridge is sold at the beginning of the next. Matador reports net income of $100,000 in 2019 and $150.000 in 2020 and declares (and pays) $20.000 in dividends each year. What is the Investment in Matador Company's balance to be reported by Northridge as of December 31, 2019?
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