Advanced Accounting 10th Edition by Thomas Schaefer, Joe Ben Hoyle, Timothy Doupnik

Exercise 18

Ace purchases 40 percent of Baskett Company on January 1 for $500,000.Although Ace did not use it, this acquisition gave Ace the ability to apply significant influence to Baskett's operating and financing policies.Baskett reports assets on that date of $1,400,000 with liabilities of $500,000.One building with a seven-year life is undervalued on Baskett's books by $140,000.Also, Baskett's book value for its trademark (10-year life) is undervalued by $210,000.During the year, Baskett reports net income of $90,000 while paying dividends of $30,000.What is the Investment in Baskett Company balance (equity method) in Ace's financial records as of December 31 a.$504,000.
B)$507,600.
C)$513,900.
D)$516,000.