Black Company acquires 25 percent of the outstanding stock of Decker Company on January
1, 2018, for $175,000 in cash. The book value of Deckers net assets on that date was $500,000,
although one of the companys buildings is undervalued by $60,000. (remaining useful life = 10 years)
In 2018 Decker suffers a $20,000 loss and pays no dividends.
In 2019 Decker has $50,000 of net income and pays cash dividends of $10,000. They also
purchase inventory from Black during 2013 for $70,000. It cost Black $49,000. 20% of this inventory
is still in Decker's inventory at year end. Theses goods will be sold to outside parties in 2020.
Prepare all journal entries necessary for Black Company regarding their investment in Decker for
the years 2018 and 2019. (assume the equity method is used)