Reference no: EM132977014

Question - Rocket and Socket were two real estate companies who set up a separate vehicle(Harrison Company) on January 1, 2019 for the purpose of acquiring a shopping center. The contractual arrangement between the parties establishes joint control of the activities that are conducted in Harrison Company. The main feature of Harrison's legal form is that the entity, not the parties has rights to the assets, and obligations for the liabilities, relating to the arrangement. These activities include the rental of the retail units, managing the car park, maintaining the center and its equipment, such as lifts and building the reputation and customer base for the center as a whole.

As a result Rocket company paid Socket in exchange for shares of Harrison's voting common stock, which represents a 40% investment. No allocation to Goodwill or other specific account was made. The joint control over Harrison is achieved by this acquisition and so Rocket applies the equity method. Harrison distributed a dividend of 2 per share during the year and reported net income of 560,000. How much is the balance of investment in Harrison's account as shown in Rocket's financial statements as of the end of the year?