On January 1, 2007 Lion Company paid $600,000 for 10,000 shares of Wolf Company’s voting common stock, which was a 10% interest in Wolf. Lion does not have the ability to exercise significant influence over the operating and financial policies of Wolf. Lion received dividends of $1.00 per share from Wolf on October 2, 2007. Wolf reported net income of $400,000 for the year ended December 31, 2007 and the ending market price of its shares was $63. On July 2, 2008 Lion paid $1,950,000 for 30,000 additional shares of Wolf Company’s voting common stock, which represents a 30% investment in Wolf. The fair values of all of Wolf’s assets, net of liabilities, were equal to their book values of $6,500,000. As a result of this transaction, Lion has the ability to exercise significant influence over the operating and financial policies of Wolf. Lion received dividends of $1.00 per share from Wolf on April 2, 2008 and $1.35 per share on October 1, 2008. Wolf reported net income of $500,000 for the year ended December 31, 2008, and $200,000 for the 6 months ended December 31, 2008.

Required

1. For the Lion Company show the dividend revenue for 2007, as well as the December 31, 2007 unrealized increase in value of available-for-sale securities and carrying value of the investment account.

2. Assuming that Lion Company issues comparative financial statements for 2007 and 2008, show the investment income for 2007 and 2008, as well as the December 31, 2007 and 2008 carrying value of the Investment account.