On January 1, 2020, Exile Company bought 40,000 shares of the available 200,000 voting common shares of
Davis Corporation, a publicly traded firm. This acquisition provided Exile with significant influence. Exile
paid $390,000 cash for the investment. At the time of the acquisition, Davis had assets of $2,350,000 and
liabilities of $720,000. Asset values relected the fair market value except for capital assets that had a net book
value of $250,000 and a fair market value of $420,000. These assets had a remaining useful life of four years.
For 2020, Davis reprted net income of $310,000 and paid cash dividends of $82,000.
Instructions: Assuming Exile is using the equity method for accounting for this investment answer the following questions:
A) Did the initial investment include a payment for goodwill? Provide support for your answer.
B) Calculate the 2020 income inclusion for Exile.
C) Provide the entry to record the purchase of the shares on January 1, 2020.
Date	Description	Dr	Cr
D) Provide the entry to record the dividends received by Exile in 2020.
Date	Description	Dr	Cr
E) Provide the entry to record the investment income for Exile in 2020.
Date	Description	Dr	Cr
F) What is the balance of the investment on Exiles balance sheet at the end of 2020?