An investor company owns 30% of the outstanding common stock of an investee company, which allows the investor to exercise significant influence over the investee. The equity investment was reported at $500,000 as of the end of the previous year. During the year, the investor received dividends of $60,000 from the investee. The investee reports the following income statement for the year:

Revenues.......$2,000,000

Expenses........$1,600,000

Net Income.....$400,000

A. How much equity income should the investor report in its current year income statement?

B. What amount should the investor report for the equity investments in its balance sheet at the end of the year?

C. Assume the fair value of the investee company is $2.1 million at the end of the year. How should the fair value of the investee company be reflected in the investor's financial statements?