Damon,Inc. ,acquired 25% of Jolie Enterprises for $8,000,000 on October 1,2016.The total fair value of Jolie's identifiable net assets was $27,000,000 on that date,and the total book value of those net assets was $23,000,000.The difference between fair value and book value is attributed to equipment that has a remaining useful life of 4 years.During 2016 Jolie recognized net income of $2,000,000 and paid dividends of $1,200,000 ($300,000 per quarter).Jolie had a fair value of $36,000,000 as of December 31,2016.
Required: Assume Damon accounts for the Jolie investment under the equity method.Indicate the total effect of the Jolie investment on Damon's:
1)net income for 2016
2)the balance in Damon's investment account on December 31,2016.

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The Answer of Damon,Inc. ,acquired 25% of Jolie Enterprises for $8,000,000 on October 1,2016.The total fair value of Jolie's identifiable net assets was $27,000,000 on that date,and the total book value of those net assets was $23,000,000.The difference between fair value and book value is attributed to equipment that has a remaining useful life of 4 years.During 2016 Jolie recognized net income of $2,000,000 and paid dividends of $1,200,000 ($300,000 per quarter).Jolie had a fair value of $36,000,000 as of December 31,2016.
Required: Assume Damon accounts for the Jolie investment under the equity method.Indicate the total effect of the Jolie investment on Damon's:
1)net income for 2016
2)the balance in Damon's investment account on December 31,2016.

Damon,Inc ,Acquired 25% of Jolie Enterprises for $8,000,000 on October