What is the investment in equity method

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Reference no: EM131212283

Franklin purchases 40 percent of Johnson Company on January 1 for $578,700. 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 $1,509,000 with liabilities of $572,000. One building with a seven year life is undervalued on Johnson’s books by $274,750. Also, Johnson’s book value for its trademark (10-year life) is undervalued by $235,000. During the year, Johnson reports net income of $180,000 while declaring dividends of $120,000. What is the Investment in Johnson Company balance (equity method) in Franklin’s financial records as of December 31? $602,700. $577,600. $593,300. $649,600.

Reference no: EM131212283

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