Easy Chair Company purchased 40 percent ownership of Stuffy Sofa Corporation on January 1, 20X1, for $158,000. Stuffy Sofas balance sheet at the time of acquisition was as follows:

STUFFY SOFA CORPORATION
Balance Sheet
January 1, 20X1
Assets								Liabilities and Equities
Cash					$	31,000		Current Liabilities		$	33,000
Accounts Receivable						134,000		Bonds Payable			273,000
Inventory						94,000		Common Stock			194,000
Land						164,000		Additional Paid-In Capital			33,000
Buildings & Equipment		$	312,000
Less: Accumulated Depreciation			(136,000	)		176,000		Retained Earnings			66,000
Total Assets					$	599,000		Total Liabilities & Equities		$	599,000

During 20X1 Stuffy Sofa Corporation reported net income of $26,000 and paid dividends of $5,000. The fair values of Stuffy Sofas assets and liabilities were equal to their book values at the date of acquisition, with the exception of buildings and equipment, which had a fair value $25,000 above book value. All buildings 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 Stuffy Sofa shares is not impaired.

Required:

a.	What amount of investment income will Easy Chair Company record during 20X1 under equity-method accounting?

b.	What amount of income will be reported under the cost method?
	amount of income

c.	What will be the balance in the investment account on December 31, 20X1?
	cost method accounting equity method accounting