#1. Ace purchases 40% of Baskett Company on January 1 for $500,000. Although not used, this acquisition gave Ace the ability to apply significant influence to the operating and financing policies of Baskett. Baskett reports assets on that date of $1,400,000 with liabilities of $500,000. Once building with a seven-year life is undervalued on Baskett’s books by $140,000. In addition, Baskett’s book value for equipment (10-year life) is undervalued by $212,000. During the year, Baskett reports net income of $90,000 while paying dividends of $30,000. What is the Investment in Baskett balance in Ace’s financial records as of December 31?
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