Accounting for Equity Method Investments Easton Company acquires 40 percent of the outstanding voting shares of Harris Company on January 1,2016. To obtain these shares, Easton pays $78,000 in cash. Harris's book value of stockholders' equity is $140,000. Easton believes that (1) Harris buildings are undervalued by $20,000, and (2) Harris has an unrecorded patent that Easton values at $15,000. Easton considers the remaining balance sheet items to be fairly valued (no book-to-fair value difference). The remaining $20,000 of the purchase price excess over book value is ascribed to corporate synergies and other general unidentifiable intangible assets (goodwill). The January 1,2016, balance sheets at the acquisition date follow:

					Easton Company		Harris Company
Cash					$42,000		$20,000
Receivables					80,000		45,000
Inventory					110,000		65,000
Investment in Harris					195,000		-
Land					50,000		30,000
Buildings, net					200,000		55,000
Equipment, net					60,000		25,000
Total assets					$737,000		$240,000
Accounts payable					$80,000		$15,000
Long-term liabilities					190,000		85,000
Common stock					250,000		20,000
Additional paid-in capital					37,000		-
Retained earnings					180,000		120,000
Total liabilities & equity					$737,000		$240,000

Assume that the undervalued buildings have an estimated remaining useful life of 20 years and the unrecorded patent has a useful life of 5 years. During 2016, Harris reported net income of $40,000 and paid cash dividends to shareholders totaling $20,000.

a. Prepare journal entries to record Easton Company's equity in the earnings of Harris Company, including any amortization of the excess of fair value over book value of assets acquired.

General Journal
Description		Debit	Credit
Investment in Harris Company		Answer ?	Answer
Equity earnings of Harris Company		Answer	Answer ?

b. What is the value of the investment in Harris Company reported on Easton Company's balance sheet as of December 31,2016?

$Answer

?