esc 180 MacBo QUESTION 4 (10 marks) On January 1, 2017, Jean Company purchased 40% of the outstanding voting stock of the Sue Corporation for $960,000. Sue's net assets on January 1, 2017 totaled $2,500,000. Sue's building was undervalued by $500,000 and its inventory was undervalued by $200,000 as of the date of purchase. The building has a ten-year remaining life as of January 1, 2017 and is depreciated by SL method; a half of the inventory was sold during 2017. Sue reported $450,000 of net income during 2017, and declared and paid dividends of $75,000. The fair value of Sue's total stock is $3,000,000 on December 31, 2017. Jean Company follows the US GAAP. Required: 1. Determine the amount of equity income to be reported by Jean during 2017 assuming that the equity method of accounting is applicable. [3 marks] 2. Determine the balance of investment in Sue as of December 31, 2017 assuming that the equity method is applicable. [3 marks] er Assume that I