On January 1, 2013, Field Company acquired 40% of North Company by purchasing 8,000 shares for $144,000 and obtained significant influence. On the date of acquisition, Field calculated that its share of the excess of the fair value over the book value of North's depreciable assets was $15,000 and that the purchased goodwill was $12,000. At the end of 2013, North reported net income of $45,000 and paid dividends of $0.70 per share. Field depreciates its depreciable assets over a 12-year remaining life.

Required:

1. Prepare all the journal entries of Field to record the preceding information for 2013.

2. Next Level What is the conceptual justification for the use of the equity method?