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On January 1, 2021, Gooch Company acquires 80% of the outstanding common stock of House Inc., for a purchase price of $12,400,000. It was determined

On January 1, 2021, Gooch Company acquires 80% of the outstanding common stock of House Inc., for a purchase price of $12,400,000. It was determined that the fair value of the noncontrolling interest in the subsidiary is $3,100,000. The book value of the Houses stockholders equity on the date of acquisition is $10,000,000 and its fair value of identifiable net assets is $10,850,000. The acquisition-date acquisition accounting premium (AAP) is allocated $600,000 to equipment with a remaining useful life of 10 years, and $250,000 to a patent with a remaining useful life of 5 years. Assume that during the year ended December 31, 2021, House reports net income of $950,000 and pays dividends of $150,000. Gooch uses the equity method to account for its investment in House.

Determine the December 31, 2021 ending balance in Gooch Companys pre-consolidation equity investment account.

Select one:

A. $12,952,000

B. $13,090,000

C. $12,400,000

D. $13,040,000

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