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George Corporation acquired all of the stock of Johnson Corporation on January 2, 2016. The book value of the net assets of Johnson on that

George Corporation acquired all of the stock of Johnson Corporation on January 2, 2016. The book value of the net assets of Johnson on that date was $200 million and the fair values of Johnson's identifiable net assets equaled the book values, except for previously unreported developed technology valued at $25 million. The fair market value of the shares issed by George Corporation was $900 million. The developed technology is straight-line amortized over 5 years. For the year ended December 31, 2016, Johnson reported net income of $65 million and declared and paid dividends of $30,000,000.

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Prepare journal entries to record George's acquisition of Johnson and subsequent entries to the investment account for 2016, using the complete equity method. Assume goodwill impairment for 2016 is $10 million and that the developed technology is not impaired.

*Hint* Three equity method entries are required. (1) Record the initial investment. (2) Record equity method income (show how you got the income number). (3) Record receipt of the cash dividend.

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