Franklin purchases 40 percent of Johnson Company on January 1 for $576,700. Although Franklin did not use it, this acquisition gave Franklin the ability to apply significant influence to Johnson's operating and financing policies. Johnson reports assets on that date of $1,484,000 with liabilities of $544,000. One building with a seven-year remaining life is undervalued on Johnson's books by $229,250. Also, Johnson's book value for its trademark (10-year remaining life) is undervalued by $272,500. During the year, Johnson reports net income of $137,000 while declaring dividends of $80,000. What is the Investment in Johnson Company balance (equity method) in Franklin's financial records as of December 317 Multiple Choice $575,500 $599,500 $630,300 $588,600 Evan Company reports net income of $192,000 each year and declares an annual cash dividend of $90,000. The company holds net assets of $1,830,000 on January 1, 2020. On that date, Shalina purchases 40 percent of Evan's outstanding common stock for $862,000, which gives it the ability to significantly influence Evan. At the purchase date, the excess of Shalina's cost over its proportionate share of Evan's book value was assigned to goodwill. On December 31, 2022, what is the investment in Evan Company balance fequity method) in Shalina's financial records? Multiple Choice O $1,092,400 $1056,400 $1.015,600 $984,400 A necessary condition to use the equity method of reporting for an equity investment is that the investor company must Multiple Choice have the ability to exercise significant influence over the operating and financial policies of the investee. own at least 30% of the investee's voting stock. possess a controlling interest in the investee's voting stock not have the ability to exercise significant influence over the operating and financial policies of the investee