On January 2, Well Co. purchased 10% of Rea, Inc.s outstanding common shares for $400,000, which equaled the carrying amount and the fair value of the interest purchased in Reas net assets. Well did not elect the fair value option. Because Well is the largest single shareholder in Rea, and Wells officers are a majority on Reas board of directors, Well exercises significant influence over Rea. Rea reported net income of $500,000 for the year and paid dividends of $150,000. In its December 31 balance sheet, what amount should Well report as investment in Rea?

Select one:

a. $450,000

b. $435,000

c. $400,000

d. $385,000