Consider the following sequence of events:
• On January 1, 2008, Big Time Motors purchased 25% of Cooper Tire Company’s common stock (one of its suppliers) for \($150\) million. The book value of Cooper's net assets on this date was \($400\) million.*
• Cooper earned \($25\) million in net income for 2008.
• Cooper declared and paid total dividends of \($15\) million during 2008.
• On January 1, 2009, Big Time purchased an additional 15% of Cooper common stock for \($100\) million.*
• Cooper had a net loss of \($40\) million for 2009.
• Cooper paid total dividends of \($18\) million during 2009.
• Assume that cost in excess of book value is attributable to goodwill.
Required:
1. What amount of investment income should Big Time report on its 2008 income statement as a result of its investment in Cooper? At what amount would Big Time Motors report its investment in Cooper in its December 31, 2008 balance sheet?
2. At what amount should Big Time report its investment in Cooper in its December 31, 2009 balance sheet?