Exercise 22-23 Stellar Corp. was a 30% owner of Pearl Company, holding 210,000 shares of Pearl's common stock on December 31, 2016. The investment account had the following entries. Investment in Pear $3,120,000 126/15 Dividend received 1/1/15 Cost 12/31/15 Share of income 12/31/16 Share of income $140,000 390,000 12/5/16 Dvidend received 490,000 230000 On January 2, 2017, Stellar sold 126,000 shares of Pearl for $3,300,000, thereby losing its significant influence. During the year 2017, Pearl experienced the following results of operations and paid the following dividends to Stellar. Pearl Income (Loss) Dividends Pald to Stellar 2017 $280,000 $50,000 At December 31, 2017, the fair value of Pearl shares held by Stellar is $1,590,000. This is the first reporting date since the January 2 sale (b) Compute the carrying amount of the investment in Pearl as of December 31, 2017 (prior to any fair value adjustment) Carrying amount (c) Prepare the adjusting entry on December 31, 2017, applying the fair value method to Stellar's long-term investment in Pearl Company securities. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit Dec. 31,20127 SHOW UIST