Reference no: EM132585317

On January 1, 2017, Bridgeport Co. purchased 23,000 shares (a 10% interest) in Elton John Corp. for $1,330,000. At the time, the book value and the fair value of John's net assets were $12,300,000.

On July 1, 2018, Bridgeport paid $2,840,000 for 46,000 additional shares of John common stock, which represented a 20% investment in John. The fair value of John's identifiable assets net of liabilities was equal to their carrying amount of $13,300,000. As a result of this transaction, Bridgeport owns 30% of John and can exercise significant influence over John's operating and financial policies. (Any excess fair value is attributed to goodwill.)

                                                      Net Income               Dividend per Share
Year ended 12/31/17                    $770,000            None
Six months ended 6/30/18                490,000          None
Six months ended 12/31/18                815,000         $1.60

Question 1: Determine the ending balance that Bridgeport Co. should report as its investment in John Corp. at the end of 2018.