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.

Required

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.