Rocket Corporation has owned stock of Knight Corporation since 2001. At December 31, 2007, its balances related to this investment were:

On January 1, 2008, Rocket purchased additional stock of Knight Company for $445,000 and now has significant influence over Knight. If the equity method had been used in 2004-2007, income would have been $33,000 greater than dividends received. Prepare Rocket's journal entries to record the purchase of the investment and the change to the equity method.

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Available-for-Sale Securities $185,000 Securities Fair Value Adj (AFS) 34,000 Dr. Unrealized Holding Gain or Loss-Equity 34,000 Cr.