Equity method $($LO $17-4)$

Wilde Company acquired $30\%$ of Micki, Inc., on January $1,20$X$1,$ at a cost of $$40$ million. At the time, Micki's balance sheet was as follows:

$($$ in millions$)$

Cash$=$ $$25$

Inventory$=35$

Fixed assets$=240$

Total assets $=$ $$300$

Total liabilities$=$$$210$

Common equity$=90$

Total liabilities and equity$=$$$300$

Only one of Micki's separately identifiable assets and liabilities had a fair value different from book value$-$its fixed assets, whose fair value was $$260$ million. The fixed assets had an expected remaining economic life at the time of $15$ years.

Micki reported net income of $$18$ million in $20$X$1$ and paid dividends of $$4$ million. Ignore income taxes.

Required:

$1.$ What is the amount of excess cost associated with Wilde's investment in Micki as of January $1,20$X$1?$

$2.$ What is the amount of income from its investment in Micki that Wilde reports in its $20$X$1$ income statement?

$3.$ What is the amount of investment in Micki that Wilde reports on its December $31,20$X$1,$ balance sheet?