On January 1, 2020, Archer, Incorporated, paid $100,000 for a 30% interest in Harley Corporation. This investee had assets with a book value of $550,000 and liabilities of $300,000. A patent held by Harley having a book value of $10,000 was actually worth $40,000 with a six-year remaining life. Any goodwill associated with this acquisition is considered to have an indefinite life. During 2020, Harley reported net income of $50,000 and paid dividends of $20,000 while in 2021 it reported net income of $75,000 and dividends of $30,000. Assume Archer has the ability to significantly influence the operations of Harley.The balance in the Investment in Harley account at December 31, 2021, is

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The correct answer is A. The balance in the Investment in Harley account at December 31, 2021, is $119,500.Explanation:The initial investment is $100,000.The share of Harley's net income for 2020 is $50,000 x 30% = $15,000.The share of Harley's net income for 2021 is $75,000 x 30% = $22,500.The share of Harley's dividends for 2020 is $20,000 x 30% = $6,000.The share of Harley's dividends for 2021 is $30,000 x 30% = $9,000.The adjustment for the patent is $40,000 - $10,000 = $30,000.The amortization of the patent for 2020 is $30,000 / 6 = $5,000.The amortization of the patent for 2021 is $30,000 / 6 = $5,000.The balance in the Investment in Harley account at December 31, 2021, is $100,000 + $15,000 + $22,500 - $6,000 - $9,000 + $30,000 - $5,000 - $5,000 = $119,500.

On January 1, 2020, Archer, Incorporated, Paid $100,000 for a 30