2. On 1/1/2015, Choco paid $150,000 to acquire 40% of the voting common stock of Cookie. Following is the financial information about Cookie. Book value of assets $450,000 Book value of liabilities $125,000 Net income (2015) Net income (2016) $80,000 $100,000 Dividends (2015) Dividends (2016) $40,000 $45,000 Fair market value of investment 1/1/2015 Fair market value of investment 12/31/2016 $160,000 $180,000 Cookie has a patent with book value of $5,000 but actually $25,000 with 8 years remaining life.

Q1: What method should be used to record this investment?

Q2: Calculate goodwill (if any).

Q3: Calculate annual amortization of under/overvalued asset.

Q4: What is the balance of the investment account in Cookie at 12/31/2016?