Puffin Industries acquired all of Sunset Coast Digital's stock on January 1, 2014, for $1,750,000 $1,050,000 in excess of book value. At that time, Sunset Coast's inventory (LIFO) was overvalued by $250,000 and its plant assets (10-year life) were overvalued by $500,000. The remaining excess of cost over book value is attributed to undervalued identifiable intangible assets being amortized over 20 years. Sunset Coast depreciates plant assets and amortizes intangibles by the straight-line method. During the next three years Sunset Coast reported total net income of $425,000 and paid out 50 percent in dividends. Puffin carries its investment in Sunset Coast using the complete equity method. Sunset Coast's inventory increased each year since it was acquired by Puffin, and Sunset Coast's reported net income for 2016 was $100,000.

a. Compute Puffin's 2016 equity in net income of Sunset Coast. Sunset Coast's reported net income for 2016 Revaluation write-offs: 100,000 Plant assets 0,000 15,000X 35,000 Identifiable intangibles Equity in net income of Sunset Coast b. Compute the balance in the Investment in Sunset Coast account at December 31, 2016, after all equity method entries have been booked. Investment in Sunset Coast, January 1, 2014 Sunset Coast's reported income, 2014-2016 Sunset Coast's reported dividends, 2014-2016 Revaluation write-offs, 2014-2016: 1 1,750,000 nset Coasts reported Income. 2014-2016425,000 425,000 / 212,500X Plant assets 150,000 Identifiable intangibles 45,000X | 1,767,500|x Investment in Sunset Coast, December 31, 2016