2. The 2016 income statement of Salem Company follows: SALEM COMPANY Consolidated Statements of Operations In thousands For the Years Ended December 31 Sales 20162015 $472,145$393,218 42,130 10,002 445,350 roduct rvice 50.704 532,838 Cost of sales 370,473 39,061 5,97 315,498 29,989 roduct rvice Financing 352,776 42,574 33,425 415,51 Gross margin Selling, general and administrative expenses5 ncome (loss) from operations 65 59,14 nterest and other income (expense) terest and other income Equity income from Portland Co., including gain on sale Interest expense nterest and other income (expense), net ncome (loss) before income taxes 18,956 13,702 18 83,641 17,5 13,34 72.4 15,22 ncome tax expense Net income (loss) S 66,076 $57.272 Required: a. What accounting method does Salem use to account for its investments in Portland Co.? According to GAAP, when must Salem account for its investments in affiliates by consolidating their financial statements? b