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3. On 1/1/2015, Choco paid $92,000 to acquire 10% of the voting common stock of Cookie. In 1/1/2016, Choco acquired additional 20% of the voting common stock of Cookie for $210,000. Following is the financial information about Cookie. Book value of net assets 1/1/2015 $800,000 Net income (2015) Net income (2016) $180,000 $210,000 Dividends (2015) Dividends (2016) $80,000 $100,000 Land undervalued 12/31/2015 Land undervalued 12/31/2016 $60,000 $70,000 All excess payment will be recorded using Trademark which has useful life of 9 years in 2016. During the year, there was no fair market value adjustment for Cookie.

Q1: In 2015, what method should be used to record this investment?

Q2: What is the balance of the investment account in Cookie at 12/31/2015?

Q3: What is the journal entry to record for dividends paid by Cookie at 12/31/2015?

Q4: In 2016, after additional 20% acquisition of Cookie, what method should be used to record this investment for 2015 and 2016?

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