Milani, inc., acquired 10 percent of seida corporation on january 1, 2017, for $188,000 and appropriately accounted for the investment using the fair-value method. on january 1, 2018, milani purchased an additional 30 percent of seida for $637,000 which resulted in significant influence over seida. on that date, the fair value of seida's common stock was $2,000,000 in total. seida's january 1, 2018 book value equaled $1,850,000, although land was undervalued by $135,000. any additional excess fair value over seida's book value was attributable to a trademark with an 8-year remaining life. during 2018, seida reported income of $308,000 and declared and paid dividends of $108,000. prepare the 2018 journal entries for milani related to its investment in seida.

Purchase entry:

Seida Investment   600,000

Trademark                37,000

            Cash                          637,0000

Net Income Entry:

Seida Investment 123,200

          Gain on investment   123,200

Dividends Entry:

cash   43,200

  Seida Investment 123,200

Explanation:

current investment fair value: 2,000,000 x 40% = 800,000

previous value in books:    2,000,000 x 10% =      (200,000)

adjustment on Sieda investment:                            600,000

Purchase for                                                              637,000

TradeMark                                                                   37,000

Milani participation in the income: 308,000 x 40% = 123,200

Milani participation in the dividends: 108,000 x 40% =   43,200

the correct option is c

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