Advanced Accounting Assignment
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During January 2012, Wells, Inc. acquired 30%
of the outstanding common stock of Wilton
Co. for $1,400,000. This investment gave Wells the ability to exercise
significant influence over Wilton.
Wilton’s assets on that date were recorded at $6,400,000 with liabilities of $3,000,000. Any excess of cost over
book value of Wells’ investment was attributed
to unrecorded patents having a remaining useful life of ten years. In 2012, Wilton reported net income of $600,000. For
2013, Wilton reported net income
of $750,000. Dividends of $200,000 were paid in each of these two years. What was
the reported balance of Wells’ Investment in Wilson Co. at December 31, 2013?