On
January 3, 2013, Matteson Corporation acquired 40 percent of the outstanding
common stock of O’Toole Company for $1,259,000. This acquisition gave Matteson
the ability to exercise significant influence over the investee. The book value
of the acquired shares was $869,000. Any excess cost over the underlying book
value was assigned to a copyright that was undervalued on balance sheet. This
copyright has a remaining useful life of 10 years. For the year ended December
31, 2013, O’Toole reported net income of $299,000 and paid cash dividends of
$50,000. At December 31, 2013, what should Matteson report as its investment in
O’Toole under the equity method?
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