Easton Company acquires 40 percent of the outstanding voting shares of Harris Company on January 1,2016. To obtain these shares, Easton pays $312,000 in cash. Harris's book value of stockholders' equity is $560,000. Easton believes that (1) Harris buildings are undervalued by $80,000, and (2) Harris has an unrecorded patent that Easton values at $60,000. Easton considers the remaining balance sheet items to be fairly valued (no book-to-fair value difference). The remaining $80,000 of the purchase price excess over book value is ascribed to corporate synergies and other general unidentifiable intangible assets (goodwill).

Assume that the undervalued buildings have an estimated remaining useful life of 20 years and the unrecorded patent has a useful life of 5 years. During 2016, Harris reported net income of $160,000 and paid cash dividends to shareholders totaling $80,000.

a. Prepare journal entries to record Easton Company's equity in the earnings of Harris Company, including any amortization of the excess of fair value over book value of assets acquired.

General Journal
Description		Debit	Credit
Answer: Buildings/Dividend income/Equity earnings of Harris Company/Investment in Harris Company/Patent		Answer	Answer
Answer: Buildings/Dividend income/Equity earnings of Harris Company/Investment in Harris Company/Patent

(Only 1 journal entry)

b. What is the value of the investment in Harris Company reported on Easton Company's balance sheet as of December 31,2016?