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On January 1, 2014, Ridge Road Company acquired 30 percent of the voting shares of Sauk Trail, Inc. for $4,700,000 in cash.
Also as of January 1, 2014, Sauk Trail's computing equipment had a remaining estimated useful life of seven years. The patented technology was estimated to have a three year remaining useful life. The trademark's useful life was considered indefinite. Ridge Road attributed to goodwill any unidentified excess cost.
During the next two years, Sauk Trail reported the following net income and dividends:
Net Income Dividends Declared 2014 $ 2,000,000 $ 250,000 2015 2,185,000 260,000
b.What amount should Ridge Road report for its equity in Sauk Trail's earnings on its income statements for 2014 and 2015?
