On April 2, 20X4, Curry Ltd. acquired 40% of the outstanding common shares of Jasmine Ltd. by issuing one share of Curry plus $ 5 cash for each of Jasmine€™s shares acquired. At the time of purchase, Curry€™s shares were trading at $ 25 per share and Jasmine€™s shares were trading at $ 28. Jasmine had a total of 1 million shares outstanding.
At the date of acquisition, the shareholders€™ equity of Jasmine totaled $ 18,000,000. The fair values of Jasmine€™s assets and liabilities were the same as their net carrying values, except for the following capital assets:

The building and equipment have estimated remaining useful lives of ten years and five years respectively. Jasmine uses straight- line amortization.
For the year ended March 31, 20X5, Jasmine reported net income of $ 1,500,000. Jasmine€™s dividend payout was 60% for fiscal 20X5.

Required
For the year ended March 31, 20X5, compute:
(1) Curry€™s equity in the earnings of Jasmine.
(2) The balance of the investment account at the fiscal year- end, using the equity method. Provide supportingcalculations.

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Land Building Equipment Carrying value $5,000,000 5,000,000 5,000,000 Fair value $8,000,000 5,000,000 7,000,000