On January 1, 2018, Jackie Corp. purchased 30% of the voting common stock of Rob Co., paying $2,000,000. Jackie properly accounts for this investment using the equity method. At the time of the investment, Rob's total stockholders' equity was $3,000,000. Jackie gathered the following information about Rob's assets and liabilities whose book values and fair values differed: Book ValueFair ValueBuildings (15-year life)$1,000,000$1,500,000Equipment (5-year life) 2,500,000 3,000,000Franchises (10-year life)$0$500,000??Any excess of cost over fair value was attributed to goodwill, which has not been impaired. Rob Co. reported net income of $300,000 for 2018, and paid dividends of $100,000 during that year.?What is the balance in Jackie Corp's Investment in Rob Co. account at
December 31, 2018?
A. $2,005,000.
B. $2,090,000.
C. $2,000,000.
D. $2,200,000.
E. $2,060,000.
Answer: A
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