Question
Smith Inc. plans to use the equity method of accounting to account for its investment in Robin Corporation. The following information is available: 1. On
Smith Inc. plans to use the equity method of accounting to account for its investment in Robin Corporation. The following information is available:
1. On 1/1/2018, Smith Inc. purchased $900,000 worth of Robin Corp.s common stock. Smiths ownership interest in Robin Corp is 35%.
2. For 2018, Robin Corp. reported net income totaling $1,200,000 and paid dividends of $215,000 to all its shareholders. The dividends were distributed on 12/31/18.
Based on the above facts, what should Smith Inc. report as the investment account balance for the Robin Corporation investment at the end of 2018?
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