Best Corporation acquired 25 percent of the voting common stock of Flair Company on January 1. 20X7, by issuing bonds with a par value and fair value of \(\$ 170.000\) and making a cash payment of \(\$ 26,000\). At the date of acquisition, Flair Company reported assets of \(\$ 740,000\) and liabilities of \(\$ 140,000\). The book values and fair values of Flair's net assets were equal, except for land and copyrights. Flair's land had a fair value \(\$ 16,000\) greater than its book value. All of the remaining purchase price was attributable to the increased value of Flair's copyrights with a remaining useful life of eight years. Flair company reported a loss of \(\$ 88,000\) in \(20 \times 7\) and net income of \(\$ 120,000\) in 20X8. Flair paid dividends of \(\$ 24,000\) each year.

\section*{Required}

Assuming Best Corporation uses the equity method in accounting for its investment in Flair Company, prepare all journal entries for Best Corporation for 20X7 and 20X8.