California Tech was seeking to gain an expansion in Hampton Roads area. Toward that end, on January 1, 2021, California Tech bought 5% of the outstanding common shares of Hampton Roads Broadcasting, Inc., for $820,000 and 30% of the outstanding common shares of Tidewater Magazine for $3,300,000.

At the date of purchase, the book value of Hampton Roads Broadcastings net assets was $16,400,000. The book value of Tidewater Magazines net assets was $10,000,000. The book values and fair values for all balance sheet items of Tidewater Magazine were the same except for land and building. The fair value exceeded book value by $400,000 for the land and by 600,000 million for the building. The estimated useful life of the building is 40 years.

Hampton Roads Broadcasting reported net income of $ 800,000 and Tidewater Magazine reported net income of 600,000 for the year ended December 31, 2021.

Hampton Roads Broadcasting paid a cash dividend of in total $320,000 and Tidewater Magazine paid a cash dividend of in total $200,000.

According to the news posted on Wall Street Journal, Hampton Roads Broadcasting was worthy as much as $16,500,000 (fair value) in the market and the fair value of Tidewater Magazine was $12,100,000 on December 31, 2021.

Required:

1. Prepare the journal entry January 1, 2021, for the purchase of Hampton Roads Broadcastings stocks and the purchase of Tidewater Magazines stocks. (3 Points)
2. Prepare the journal entry to recognize the receipt of cash dividends paid by Hampton Roads Broadcasting and the receipt of cash dividends paid by Tidewater Magazine. (4 Points)
3. Prepare any journal entry necessary on December 31, 2021, when Hampton Roads Broadcasting and Tidewater Magazine reported net income. If no journal entry is needed, please indicate no journal entry necessary. (2 Points)
4. Prepare any journal entry necessary on December 31, 2021, when market values of Hampton Roads Broadcasting and Tidewater Magazine are different from their book value. If no journal entry is needed, please indicate no journal entry necessary. (2 Points)
5. Prepare any journal entry necessary on December 31, 2021, if further adjustments are needed for the difference between fair value and book value of Tidewater Magazines land and building. If no journal entry is needed, please indicate no journal entry necessary. (2 Points)