On January 3, 2024, Madison Corporation purchased 30% of the voting common stock of Huntsville Company, paying $3,000,000. Madison decided to use the equity method to account for this investment. At the time of the investment, Huntsville’s total stockholders’ equity was $8,000,000. Madison gathered the following information about Huntsville’s assets and liabilities:
Book ValueFair ValueBuildings (10-year life)$ 400,000$ 600,000Equipment (5-year life)$ 1,200,000$ 1,400,000Franchises (8-year life)$ 0$ 480,000
For all other assets and liabilities, book value and fair value were equal. Any excess of cost over fair value was attributed to goodwill, which has not been impaired.
What is the amount of goodwill associated with the investment?
Multiple Choice
$600,000
$264,000
$0
$336,000
$480,000