On January 1, Belleville Company paid $2,240,000 to acquire 56,000 shares of O'Fallon's voting common stock, which represents a 40 percent investment. No allocations to goodwill or other specific accounts were made. Significant influence over O'Fallon is achieved by this acquisition, and so Belleville applies the equity method. O'Fallon declared a $1 per share dividend during the year and reported net income of $626,000. What is the balance in the Investment in O'Fallon account found in Belleville's financial records as of December 31? Multiple Choice $2,434,400. $2,490,400. $2,554,400. $2,494,400. In January 2020, Domingo, Inc., acquired 20 percent of the outstanding common stock of Martes, Inc., for $739,000. This investment gave Domingo the ability to exercise significant influence over Martes, whose balance sheet on that date showed total assets of $4,043,000 with liabilities of $983,000. Any excess of cost over book value of the investment was attributed to a patent having a remaining useful life of 10 years. In 2020, Martes reported net income of $219,000. In 2021, Martes reported net income of $282,000. Dividends of $80,000 were declared in each of these two years. What is the equity method balance of Domingo's Investment in Martes, Inc., at December 31, 2021? Multiple Choice $890,500. $781,800. $877,800. $807,200. Franklin purchases 40 percent of Johnson Company on January 1 for $593,400. Although Franklin did not use it, this acquisition gave Franklin the ability to apply significant influence to Johnson's operating and financing policies. Johnson reports assets on that date of $1,468,000 with liabilities of $545,000. One building with a seven-year remaining life is undervalued on Johnson's books by $203,000. Also, Johnson's book value for its trademark (10-year remaining life) is undervalued by $357,500. During the year, Johnson reports net income of $132,000 while declaring dividends of $70,000. What is the Investment in Johnson Company balance (equity method) in Franklin's financial records as of December 31? Multiple Choice $592,300. $645,100. $603,900. $618,200. Jubilee, Inc., owns 30 percent of JPW Company and applies the equity method. During the current year, Jubilee buys inventory costing $126,000 and then sells it to JPW for $180,000. At the end of the year, JPW still holds only $26,400 of merchandise. What amount of gross profit must Jubilee defer in reporting this investment using the equity method? Multiple Choice $5,376. $11,676. $9,376. $2,376. Alex, Inc., buys 30 percent of Steinbart Company on January 1, 2020, for $762,000. The equity method of accounting is to be used. Steinbart's net assets on that date were $2.30 million. Any excess of cost over book value is attributable to a trade name with a 20-year remaining life. Steinbart immediately begins supplying inventory to Alex as follows: Amount Held by Alex at Year-End Year 2020 2021 Cost to Steinbart $202,160 117,990 Transfer Price $266,000 171,000 (at transfer price) $66,500 52,000 Inventory held at the end of one year by Alex is sold at the beginning of the next. Steinbart reports net income of $95,500 in 2020 and $130,300 in 2021 and declares $30,000 in dividends each year. What is the equity income in Steinbart to be reported by Alex in 2021? Multiple Choice $51,642. $44,142. $35,442. $30,982