Palmetto Corporation acquired all of the voting stock of Steadman Company on January 2, 2021, by issuing stock with a fair value of $35,200,000. Steadman’s book value was $11,000,000 at the date of acquisition, and its net assets were reported at amounts approximating fair value. However, Palmetto determined that Steadman had previously unreported identifiable intangibles with a fair value of $2,200,000 with a 4-year life. Steadman reported net income of $1,980,000 in 2021 and $2,750,000 in 2022 and declared and paid no dividends. There was no goodwill impairment in 2021, but impairment in 2022 was $880,000. Palmetto uses the compete equity method to report its investment in Steadman on its own books.

Required

a. Calculate equity in net income for 2022, reported on Palmetto's books.

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b. Calculate the December 31, 2022, investment balance, reported on Palmetto’s books.

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