Ch 5 Less than wholly owned subs - Graded HW (i) Pencil Company purchased 40 percent ownership of Stylus Corporation on January 1, 20X1, for $165,000. Stylus's balance sheet at the time of acquisition was as follows: 5 points During 20X1 Stylus Corporation reported net income of $28,000 and pald dividends of $6,000. The falr values of Stylus's assets and Ilabilitles were equal to their book values at the date of acquisition, with the exception of bulldings and equipment, which had a fair value $25,000 above book value. All bulldings and equipment had remaining lives of five years at the time of the business combination. The amount attributed to goodwill as a result of its purchase of Stylus shares Is not Impalred. Required: a. What amount of Investment Income will Pencil Company record during 201 under equity-method accounting? b. What amount of Income will be reported under the cost method? c. What will be the balance in the investment account on December 31 , 20X1