Problem $1-8($Algo$)($LO $1-4,1-5)$

Franklin purchases $40$ percent of Johnson Company on January $1$ for $$619,800.$ Although Franklin did not use it$,$ this acquisition gave Franklin the ability to apply significant influence to Johnson's operating and financing policies. Johnson reports assets on that date of $$1,491,000$ with liabilities of $$510,000.$ One building with a $7-$year remaining life is undervalued on Johnson's books by $$196,000.$ Also, Johnson's book value for its trademark $(10-$year remaining life$)$ is undervalued by $$372,500.$ During the year, Johnson reports net income of $$171,000$ while declaring dividends of $$110,000.$ What is the Investment in Johnson Company balance $($equity method$)$ in Franklin's financial records as of December $31?$

Multiple Choice

$$ $$629,300$

$$ $$686,500$