Equity Method} On January 1, 2018, Hannah Corporation acquired (40 %) of the outstanding common shares (

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Equity Method}

On January 1, 2018, Hannah Corporation acquired $40 \%$ of the outstanding common shares ( 400 of 1,000 outstanding shares) of Valley Manufacturing Ltd. for $\$ 60.000$, which equals the book value of Valley. On December 31, 2018. Valley reported net income of $\$ 30.000$ and declared and paid a cash dividend of $\$ 11.500$.

\section*{Required:}
1. Prepare the journal entries made by Hannah to record the transactions related to its investment in Valley.
2. Give the title and amount of each item (except cash) on the December 31, 2018, statement of financial position related to the investment. Name the statement of financial position section in which each item appears.
\section*{Exercise

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