As mentioned earlier, Phan uses equity method to keep track of the investment internally. Compute the balance of Phans Investment in ABC account on January 1, 2022 (according to its internal accounting records)? This question is a little tough but rest assured all the information is there for you to figure out the answer.

Phan acquired all of ABC's common stock on January 1,2021 , in exchange for $1,100,000 in cash. On that day, ABC reported common stock of $310,000 and retained eamings of $450,000. At the acquisition date, $180,000 of the fair-value price was attributed to undervalued land while $120,000 was assigned to undervalued building having an 8 -year remaining life. Any excess of consideration transferred over fair value of net assets acquired is considered goodwill. Over the next few years, Phan applied the equity method to the recording of this investment. The following are individual financial statements for the year ending December 31, 2022