Reference no: EM132734887

On January 4, 2017, Investor Company paid $794.7 million cash for 30 million shares of Investee Corp. common stock. The investment represents a 37% interest in the net assets of Investee and gave Investor the ability to exercise significant influence over Investee's operations. Investor received dividends of $2.45 per share on June 30, 2017, and Investee reported net income of $256 million for the year ended December 31, 2017.

• The market value of Investee's common stock at December 31, 2017 was $26 per share. On the purchase date, the book value of Investee's net assets was $1,365 million and:
• The fair market value of Investee's depreciable assets, with an average remaining useful life of ten years exceeded their book value by $270 million. The fair market values and book values were equal for Investee's other net assets.

Problem 1. Prepare all journal entries related to the Investment during 2017. Show all answers in millions ($). For example, $2,190,000 would be shown as $2.19M.

Problem 2. How much of Investor's initial investment in Investee on January 4, 2017 was Goodwill?

Problem 3. Give the Balance Sheet value in Investor's investment in Investee at December 31, 2017 and the total net income effect of all transactions relating to the investment in Investee for fiscal 2017.