Saxton Corporation purchased 30 percent of Taylor Company’s voting stock on January 1, 2016, for $4...

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Saxton Corporation purchased 30 percent of Taylor Company’svoting stock on January 1, 2016, for $4 million in cash. At thedate of acquisition, Taylor reported its total assets at $80million and its total liabilities at $74 million. Investigationrevealed that Taylor’s plant and equipment (10-year life) wasovervalued by $2 million and it had an unreported customer database(3-year life) valued at $700,000. Taylor declares and pays $150,000in dividends and reports net income of $325,000 in 2019.
Required
Prepare the necessary journal entries on Saxton’s books to reportthe above information for 2019 assuming Saxton uses the equitymethod to report its investment.

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Saxton Corporation purchased 30 percent of Taylor Company’svoting stock on January 1, 2016, for $4 million in cash. At thedate of acquisition, Taylor reported its total assets at $80million and its total liabilities at $74 million. Investigationrevealed that Taylor’s plant and equipment (10-year life) wasovervalued by $2 million and it had an unreported customer database(3-year life) valued at $700,000. Taylor declares and pays $150,000in dividends and reports net income of $325,000 in 2019.RequiredPrepare the necessary journal entries on Saxton’s books to reportthe above information for 2019 assuming Saxton uses the equitymethod to report its investment.