A Subsidiary Is Acquired on January 1, 2020 for $20

Essay

A subsidiary is acquired on January 1, 2020 for $20 million in cash. The subsidiary's book value at the date of acquisition was $3 million. Following is revaluation information for the subsidiary's identifiable net assets at the date of acquisition:
$$\begin{array} { l c l } & { \text { Fair Value } - \text { Book Value } } \\\text { Identifiable intangibles } & \$ 1,000,000 & \text { Straight-line, } 5 \text { years } \\\text { Long-term debt } & ( 100,000 ) & \text { Straight-line, } 4 \text { years }\end{array}$$ During 2020, the subsidiary reported net income of $1.2 million, and other comprehensive income of $25,000. There are no revaluation impairments in 2020. The parent uses the complete equity method to report its investment on its own books.
Required
a. Calculate equity in net income for 2020, reported on the parent's books.
b. Prepare the parent's entries to account for the investment during 2020.
c. What is the December 31, 2020 balance in the investment account, reported on the parent's books?