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  1. business
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  3. on 1/1/20x1, bravo co. purchased 25% of drano inc'

On 1/1/20X1, Bravo Co. purchased 25% of Drano Inc's 1,000,000 common shares at...

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Accounting

On 1/1/20X1, Bravo Co. purchased 25% of Drano Inc's
1,000,000 common shares at $20 per share, enabling it to
exercise significant influence over Drano. On 1/1/20X1, fair
value of Drano's land, building, patent and inventory exceeded
the carrying amounts by $1,000,000,$800,000,600,000 and
$40,000, respectively. The building has a 20-year remaining
useful life. Patent has a 10-year remaining service life. All
inventory was sold during 20X1. Drano reported net income of
$10,000,000 and paid $240,000 dividends. Determine the
amount of investment revenue & investment in Drano as of
12/31/20X1
$2,465,000 Investment revenue & $7,405,000 Investment in
Drano.
$2,500,000 Investment revenue & $7,440,000 Investment in
Drano. (INCORRECT)
$2,360,000 Investment revenue &$7,300,000 Investment in
Drano.
$2,435,000 investment revenue & $7,375,000 Investment in
Drano.
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