In January 2014, Domingo, Inc., acquired 20 percent of the
outstanding common stock of Martes, Inc., for $700,000. Martes’s
assets on that date were recorded at $3,900,000 with liabilities of
$900,000. Any excess of cost over book value of the investment was
attributed to a patent having a remaining useful life of 10
years.
In 2014, Martes reported net income of $170,000. In 2015, Martes
reported net income of $210,000. Dividends of $70,000 were declared
in each of these two...