Company A buys 25% of the outstanding stock of Company B on January 1, 19X1, for $45,000. The book value of Company B's stock is $100,000.
During 19X1, Company B distributed a total dividend of $80,000 and earned net income of $150,000. Any difference between the cost of the investment and book value is due equally to an understatement of the plant building and to unrecorded goodwill. The life of the building is 5 years; the life of the goodwill is unknown. Prepare all necessary journal entries.