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On January 1, 2014, Josep Corp. bought 30,000 shares of the available 100,000 common shares of Manny Inc., a publicly traded firm. This acquisition provided Josep with significant influence. Josep paid $700,000 cash for the investment. At the time of the acquisition, Manny reported assets of $2,500,000 and liabilities of $1,200,000. Asset values reflected fair market value, except for capital assets that had a net book value of $500,000 and a fair market value of $730,000. These assets had a remaining useful life of five years. For 2014 Manny reported net income of $400,000 and paid total cash dividends of $100,000. On May 16, 2018, Josep sold 15,000 of its shares in Manny for $425,000. Josep has no immediate plans to sell its remaining investment in Iceberg. Manny is actively traded, and stock price information follows: Accounting 1 - Assets o January 1, 2014 = $23 o December 31, 2014 = $25 o January 1, 2018 = $26

1. Assuming Josep is using ASPE, did the initial investment include a payment for goodwill? Provide support for your answer.

2. At the end of 2014, what would appear on the income statement and balance sheet of Josep in connection with its investment in Manny? Show supporting calculations.

3. Provide the entry to account for Joseps sale of the shares in May 2018. How should Josep account for its remaining investment in Manny?

Please show how you got your answer as i would like to know how to do this type of question in the future.

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