3. Choco, Inc. acquires 15% of Cake Corporation on January 1, 2020, for $130,000 when the book value of Cakes net assets was $760,000. During 2020 Cake reported net income of $150,000 and paid dividends of $32,000. Cake has a land that are undervalued by $30,000 in January 1, 2020. On January 1, 2021, Choco purchased an additional 30% of Cake for $280,000, giving Choco the ability to significantly influence the operating policies of Cake. During 2021, Cake reported net income of $180,000 and paid dividends of $32,000. Cakes land was undervalued by $32,000 in January 1, 2021. Any excess of cost over book value is attributable to Trademark which has a useful life of 8 years in January 1, 2020. During 2020 and 2021, there was no fair value adjustment for Cake (there was no changes in fair value). And during 2020 and 2021, there was no changes in net assets.

5) In 2021, using the equity method, what is the balance of the investment account in Cake at December 31, 2020? Show your calculation (can show journal entries). (7 points)

6) Calculate Trademark in 2021 acquisition that will be recorded in 2021 if any. (4 points)

7) In 2021, calculate annual amortization of Trademark in 2021. (1 pts)

8) What is the balance of the investment account in Cake at December 31, 2021? Show your calculation (can make journal entries). (10 points)