(Learning Objective 2: Applying the appropriate accounting method for a 20%

investment) Ever Financial paid €560,000 for a 20% investment in the ordinary shares of Laker, Inc. For the fi rst year, Laker reported net income of €220,000 and at year-end declared and paid cash dividends of €105,000. On the balance-sheet date, the market value of Ever’s investment in Laker shares was €410,000.

❙ Requirements 1. Which method is appropriate for Ever Financial to use in its accounting for its investment in Laker? Why?

2. Show everything that Ever would report for the investment and any investment revenue in its year-end fi nancial statements.