On January 4, 2013, Bailey Corp Any Excess of Cost Over Fair Value Was Attributed to Voting

On January 4, 2013, Bailey Corp. purchased 40% of the voting common stock of Emery Co., paying $3,000,000. Bailey properly accounts for this investment using the equity method. At the time of the investment, Emery's total stockholders' equity was $5,000,000. Bailey gathered the following information about Emery's assets and liabilities whose book values and fair values differed: $\begin{array}{lrr}&\text { Book Value }&\text { Fair Value }\\\text { Buildings (20-year life) } & \$ 1,000,000 & \$ 1,800,000 \\\text { Equipment (5-year life) } & 1,500,000 & 2,000,000 \\\text { Franchises (10-year life) } & 0 & 700,000\end{array}$ Any excess of cost over fair value was attributed to goodwill, which has not been impaired. Emery Co. reported net income of $400,000 for 2013, and paid dividends of $200,000 during that year. How much goodwill is associated with this investment?

A) $(500,000) .
B) $0.
C) $100,000.
D) $200,000.
E) $2,000,000.