During review of the adjusting entries to be recorded on December 31, 20X8, Grand Corporation discovered that it had inappropriately been using the cost method in accounting for its investment in Case Products Corporation. Grand purchased 40 percent ownership of Case Products on January 1, 20X6, for $56,000, at which time Case Products reported retained earnings of $60,000 and capital stock outstanding of $40,000. The differential was attributable to patents with a life of eight years. Income and dividends of Case Products were:

Required 

Give the correcting entry required on December 31, 20X8, to properly report the investment under the equity method, assuming the books have not been closed. Case Products' dividends were declared in early November and paid in early December each year.  

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Item Cash Accounts Receivable Inventory Buildings and Equipment Less: Accumulated Depreciation Total Assets Accounts Payable Common Stock ($10 par value) Additional Paid-In Capital Retained Earnings Total Liabilities and Equities Book Value $ 45,000 60,000 120,000 300,000 (150,000) $375,000 $ 75,000 100,000 30,000 170,000 $375,000 Fair Value $ 45,000 60,000 130,000 240,000 $475,000 $ 75,000