DEF Inc acquired 20% of the outstanding shares of GHI Corporation for $100,000 on January 1, 2024. During the year, GHI Corporation reported net income of $80,000 and paid dividends of $20,000. Calculate DEF Inc's share of GHI Corporation's net income and dividends.

Requirement:

• Compute DEF Inc's equity income from its investment in GHI Corporation for the year.
• Discuss the accounting treatment of equity investments under the equity method.