On January 1, 2018, Morey, Inc., exchanged $177,525 for 25 percent of Amsterdam Corporation. Morey appropriately applied the equity method to this investment. At January 1, the book values of Amsterdam's assets and liabilities approximated their fair values.

On June 30, 2018, Morey paid $598,500 for an additional 70 percent of Amsterdam, thus increasing its overall ownership to 95 percent. The price paid for the 70 percent acquisition was proportionate to Amsterdam's total fair value. At June 30, the carrying amounts of Amsterdam's assets and liabilities approximated their fair values. Any remaining excess fair value was attributed to goodwill.

Amsterdam reports the following amounts at December 31, 2018 (credit balances shown in parentheses):

Revenues$(344,000)Expenses205,000Retained earnings, January 1(211,700)Dividends declared, October 110,000Common stock(500,000)

Using the acquisition method, calculate the amount of goodwill recognized by Morey on its December 31consolidated balance sheet (assume no impairments have been recognized).

HOW COME BOOK VALUE IS 735,000 (700,000 + (70,000/2))