On January 1, 20X1, Figland Company purchased for cash 40% of Irene Company’s 300,000 shares of voting common stock for $1,800,000. At the time, 40% of the book value of the underlying equity in Irene’s net assets was $1,400,000; $50,000 of the excess was attributed to the excess of fair value over book value of inventory, which Irene accounts for using the first-in, first-out (FIFO) inventory method; and $150,000 was attributed to undervaluation of depreciable assets with an average remaining life of 10 years. The remainder was attributed to implicit goodwill. As a result of this transaction, Figland can exercise significant influence over Irene’s operating and financial policies. Irene’s net income for the year ended December 31, 20X1, was $600,000. During 20X1, Irene paid $325,000 in dividends to its stockholders.

Required:

1. How much income would Figland report on its 20X1 income statement from its investment in Irene?

2. What would be the balance in the Investment in Irene Company account on December 31, 20X1?