On January 1, 2014, GEO purchased 60,000 shares (a 15% interest) in Graphic Corp. for $2,700,000. At the time, the book value and the fair value of Graphic Corp.€™s net assets were $16,000,000.
On July 1, 2015, GEO paid $3,000,000 for 60,000 additional shares of Graphic common stock, which represented a 15% investment in Graphic. The fair value of Graphic€™s identifiable assets net of liabilities was equal to their carrying amount of $17,000,000. As a result of this transaction, GEO owns 30% of Graphic and can exercise significant influence over Graphic€™s operating and financial policies. Any excess fair value is attributed to goodwill.
Graphic reported the following net income and declared and paid the following dividends.

Instructions
Determine the ending balance that GEO should report as its investment in Graphic Corp. at the end of2015.

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Net Income Year ended 12/31/14 Six months ended 6/30/15 Six months ended 12/31/15 $500,000 425,000 360,000 Dividend per Share None $0.50 $0.60