General Products (G.P.) Company manufactures heavy-duty industrial equipment and consumer durable goods. In order to enable its customers to make convenient credit arrangements, G. P. Company organized General Products Credit Corporation several years ago. G. P. Credit Corporation is 100 percent owned by G. P. Company. G. P. Company accounts for its investment in G. P. Credit Corporation using the equity method. G. P. owns shares of many other companies, and consolidates several of them in its financial statements. Refer to the comparative balance sheets and income statements for the two companies in Exhibits 12.9 and 12.10 .

a Given that G. P. Company accounted for its investment in G. P. Credit Corporation on the equity method, identify for 1980 , the components of G. P. Company's income that are attributable to the Credit Corporation's dividends and earnings.

b Assume that G. P. Company had accounted for its investment in the Credit Corporation using the cost method.

(i) Show the components of G. P. Company's income from the Credit Corporation and compute how much larger or smaller G. P. Company's income would have been for 1980 than was reported.