Problem:
In January 2014, Domingo, Inc., acquired 20 percent of the outstanding common stock of Martes, Inc., for $811,000. This investment gave Domingo the ability to exercise significant influence over Martes. Martes assets on that date were recorded at $4,171,000 with liabilities of $971,000. Any excess of cost over book value of the investment was attributed to a patent having a remaining useful life of 10 years. In 2014, Martes reported net income of $188,000. In 2015, Martes reported net income of $252,250. Dividends of $82,000 were declared in each of these two years.
Required:
Question: What is the equity method balance of Domingos Investment in Martes, Inc., at December 31, 2015?
- $866,250
- $930,450
- $832,050
- $947,550
Note: Please provide through step by step calculations.