E18-15 (Equity Method with Revalued Assets) On January 1, 1999, Kerri Strug Inc. purchased 40% of the common stock of Amy Chow Company for $400,000. The balance sheet reported the following infor- mation related to Chow Company at the date of acquisition. Assets not subject to depreciation $200,000 Assets subject to depreciation (8 year-life remaining) 600,000 Liabilities 100,000 Additional information: 1. Both book value and fair value are the same for assets not subject to depreciation and the liabilities. 2. The fair market value of the assets subject to depreciation is $680,000. 3. The company depreciates its assets on a straight-line basis; intangible assets are amortized over 10 years. 4. Amy Chow Company reports net income of $160,000 and declares and pays dividends of $125,000 in 1999 Instructions (a) Prepare the journal entry to record Strug's purchase of Chow Company. (b) Prepare the journal entries to record Strug's equity in the net income and dividends of Chow Company for 1999 (c) Assume the same facts as above, except that Chow's net income included an extraordinary loss (net of tax) of $30,000. Prepare the journal entries to record Strug's equity in the net income of Chow Company for 1999