Saxton Corporation purchased 30 percent of Taylor Companys voting stock on January 1, 2016, for $4 million in cash. At the date of acquisition, Taylor reported its total assets at $80 million and its total liabilities at $74 million. Investigation revealed that Taylors plant and equipment (10-year life) was overvalued by $2 million and it had an unreported customer database (3-year life) valued at $700,000. Taylor declares and pays $150,000 in dividends and reports net income of $325,000 in 2019.

Required Prepare the necessary journal entries on Saxtons books to report the above information for 2019 assuming Saxton uses the equity method to report its investment.