Company R owns a 30% interest in Company E, which it acquired at book value. Company E reported net income of $50,000 for 20X1 (ignore taxes). There was an intercompany sale of equipment at a gain of $20,000 on January 1, 20X1. The equipment has a 5-year life. What is Company R’s investment income for 20X1 and what adjusting entry (if any) does Company R need to make as a result of the equipment sale, if:

a. Company E made the sale?

b. Company R made the sale?

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