1.4

Matthew, Inc, owns 30 percent of the outstanding stock of Lindman Company and has the ability to significantly influence the investee's operations and decislon making. On January 1, 2021, the balance in the Investment in Lindman account is $421000 Amortization of excess falr value associated with the 30% ownership is $15,400 per year. In 2021, Lindman earns an income of $192,000 and declares cash dividends of $48,000. Previously, in 2020 , Lindman had sold inventory costing $37,800 to Matthew for $54,000 Mathew consumed all but 25 percent of this merchandise during 2020 and used the rest during 2021. Lindman sold additional inventory costing $52,800 to Motthew for $80,000 in 2021. Mathew did not consume 40 percent of these 2021 purchases from Lindman until 2022 a. What amount of equity method income would Matthew recognize in 2021 from its ownership interest in Lindman? b. What is the equity method balance in the investment in Lindman account at the end of 2021