Saxton Corporation purchased 25 percent of Taylor Company's voting stock on January 1,2010, for $3 million in cash. At the date of acquisition, Taylor reported its total assets at $60 million and its total liabilities at $56 million. Investigation revealed that Taylor's plant and equipment (15-year life) was undervalued by $1.8 million, it had an unreported customer database (2-year life) valued at $500,000, and unreported indefinite-life brand names valued at $1.5 million. Taylor pays $100,000 in dividends and reports net income of $250,000 in 2013. Impairment losses on the brand names for 2013 are $200,000.
Required
Prepare the necessary journal entries on Saxton's books to report the above information for 2013 assuming Saxton uses the equity method to report its investment.