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  3. on january 1 2017 ridge road company acquired 20 percent...

Question: on january 1 2017 ridge road company acquired 20 percent...

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On January 1, 2017, Ridge Road Company acquired 20 percent of the voting shares of Sauk Trail, Inc., for $3,000,000 in cash. Both companies provide commercial Internet support services but serve markets in different industries. Ridge Road made the investment to gain access to Sauk Trails board of directors and thus facilitate future cooperative agreements between the two firms. Ridge Road quickly obtained several seats on Sauk Trails board which gave it the ability to significantly influence Sauk Trails operating and investing activities The January 1, 2017, carrying amounts and corresponding fair values for Sauk Trails assets and liabilities follow: Carrying Amount Cash and receivables Computing equipment Patented technology Trademark Liabilities Fair Value $ 125,000 125,000 5,940,000 4,030, 000 2,030,000 5,135, 000 115,000 165,000 (200,000) (200,000)Also as of January 1, 2017, Sauk Trails computing equipment had a seven-year remaining estimated useful life. The patented technology was estimated to have a three-year remaining useful life. The trademarks 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: Dividends Net IncomeDeclared 2017 $1,830,000 $ 165,000 175,000 2018 2,015,000 a. How much of Ridge Roads $3,000,000 payment for Sauk Trail is attributable to goodwill? b. What amount should Ridge Road report for its equity in Sauk Trails earnings on its income statements for 2017 and 2018? c. What amount should Ridge Road report for its investment in Sauk Trail on its balance sheets at the end of 2017 and 2018?

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