Patrick graduated from college five years ago. he has set up an emergency fund and has been paying off his student loans. in addition, he participates in the retirement plan offered by his employer. he wants to invest $75 per month in very small companies (capitalization between $50 and $300 million or less). he should purchase stocks.

On january 2, well co. purchased 10% of rea, inc.’s outstanding common shares for $400,000, which equaled the carrying amount and the fair value of the interest purchased in rea’s net assets. well did not elect the fair value option. because well is the largest single shareholder in rea, and well’s officers are a majority on rea’s board of directors, well exercises significant influence over rea. rea reported net income of $500,000 for the year and paid dividends of $150,000. in its december 31 balance sheet, what amount should well report as investment in rea?