Boardman, Inc. acquires 40% of the outstanding voting shares of Simon, Inc. on January 1, 2017, for $380,000, which gives Boardman the ability to significantly influence Simon. Simon has a net book value of $900,000 on January 1, 2017. Simons asset and liability accounts showed carrying amounts considered equal to fair values except for a copyright whose value accounted for Boardmans excess cost over book value in its 40% purchase. The copyright had a remaining life of 10 years on January 1, 2017. No goodwill resulted from Boardmans share of the purchase.

Simon reported net income of $240,000 in 2017 and $280,000 of net income during 2018. Dividends of $90,000 and $110,000 are declared and paid in 2017 and 2018, respectively. Boardman uses the equity method.

Required:

1. On its 2018 comparative income statements, how much income would Boardman report for 2017 and 2018 in connection with the companys investment in Simon?
2. If Boardman sells its entire investment in Simon on January 1, 2019, for $700,000 cash, what is the impact on Boardmans income?
3. Assume that Boardman sells inventory to Simon during 2017 and 2018 as follows:

Year	Cost to Boardman	Price to Simon	Year-end Balance (at transfer price)
2017	$40,000	$50,000	$20,000 (sold the following year)
2018	$48,000	$64,000	$30,000 (sold the following year)

What amount of equity income should Boardman recognize for the year 2018?