% Clipboard Conditional Formatting formaasa Cell Style Font Alignment Number Calls 18 A v Excessive fair value B 1 Problem 4: Investments (11 marks) 2 3 On January 1, 2020, Edile Company bought 70,000 shares of the available 200,000 voting common shares of 4 Davis Corporation, a publicly traded firm. This acquisition provided Exile with significant influence. Exile paid $410,000 cash for the investment. At the time of the acquisition, Davis had assets of $1,850,000 and 6 liabilities of $940,000. Asset values relected the fair market value except for capital assets that had a net book value of $250,000 and a fair market value of $420,000 These assets had a remaining useful life of four years. 8 For 2020, Davis reprted net income of $282,000 and paid cash dividends of $90,000 S 10 Instructions: Assuming Exile is using the equity method for accounting for this investment answer the following question 12 All Did the initial investment include a payment for goodwill? Provide support for your answer. Shared acquired by David Net Asset of David Cost of investment Less: 35% book value Excessive fair value By calculate the 2020 income inclusion for Exile: HOY 17