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Damon, Inc., acquired 25% of Jolie Enterprises for $8,000,000 on October 1, 2018. The total fair value of Jolie's identifiable net assets was $27,000,000 on
Damon, Inc., acquired 25% of Jolie Enterprises for $8,000,000 on October 1, 2018. The total fair value of Jolie's identifiable net assets was $27,000,000 on that date, and the total book value of those net assets was $23,000,000. The difference between fair value and book value is attributed to equipment that has a remaining useful life of 4 years. During 2018 Jolie recognized net income of $2,000,000 and paid dividends of $1,200,000 ($300,000 per quarter). Jolie had a fair value of $36,000,000 as of December 31, 2018 Required: Assume Damon accounts for the Jolie investment under the equity method. Indicate the total effect of the Jolie investment on Damon's 1. net income for 2018 2. the balance in Damon's investment account on December 31, 2018. 1. Net income for 2018. 2. The balance in Damon's investment account on December 31, 2018
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