Problem:
In January 2004, Wilkinson, Inc., acquired 20 percent of the outstanding common stock of Bremm, Inc., for $700,000. This investment gave Wilkinson the ability to exercise significant influence over Bremm. Bremm's assets on that date were recorded at $3,900,000 with liabilities of $900,000. Any excess of cost over book value of the investment was attributed to a patent having a remaining useful life of 10 years.
In 2004, Bremm reported net income of $170,000. In 2005, Bremm reported net income of $210,000. Dividends of $70,000 were paid in each of these two years. What is the reported balance of Wilkinson's Investment in Bremm at December 31, 2005?
a. $728,000.
b. $748,000.
c. $756,000.
d. $776,000.
e. None of the above.
f. Cannot determine answer with facts presented