On January 1, 2021, Jackie Corp. purchased 30% of the voting common stock of Rob Co., paying $2,000,000. Jackie properly accounts for this investment using the equity method. At the time of the investment, Rob’s total stockholders’ equity was $3,000,000. Jackie gathered the following information about Rob’s assets and liabilities whose book values and fair values differed:
Book ValueFair ValueBuildings (15-year life)$1,000,000$1,500,000Equipment (5-year life) 2,500,000 3,000,000Franchises (10-year life)$0$500,000
Any excess of cost over fair value was attributed to goodwill, which has not been impaired. Rob Co. reported net income of $300,000 for 2021, and paid dividends of $100,000 during that year.
How much goodwill is associated with this investment?