Grossman corp. uses the equity method in accounting for its 10% stake in Orton inc. the book value of Grossman's investment in Orton was $20,000 at the start of the year. at the end of the year, the fair value of Orton (as a whole) was $600,000 while the fair value of Orton's assets minus its liabilities was $100,000. no excess deprecation or amortization resulted from this investment. Orton inc. earned $60,000 in net income and declared $12,000 in dividends for the year. had Orton instead used the fair value method, what would be the impact on the income statement and investment account?

Charles corp. bought all of the outstanding shares of leno inc. on 1/1/2020 for $600,000 in a combination of cash and stock. leno remains a separate entity after the acquisition. leno inc's balance sheet on that date is as follows:

 -cash $ 200,000

- current liabilities $ 100,000 

-accounts receivable 350,000 

-long term debt 200,000

- inventory 50,000

- common stock ($1 par) 20,000

- land 100,000 

-additional paid-in capital 400,000 

-equipment-net 80,000

-retained earnings 60,000

 -total assets $780,000

-total liabilities & equity $780,000

the fair values are the same as book values except for land and equipment that have fair values of $200,000 and $70,000, respectively. the equipment has a remaining life of 5 years. leno inc. also has an unrecorded patent valued at $20,000. 

further, assume that Charles corp. and leno inc. had net income of $40,000 and $60,000 over the past year. neither firm pays dividends. assume no pushdown accounting was used. Prepare the consolidation entries for a 1/1/2020 consolidated balance sheet.

Charlie's corp. purchased shares equivalent to 40% of the outstanding shares of Tillman inc. and has influence over Tillman. the goodwill resulting from the investment: 

is capitalized as an asset in charlie's corps books and tested periodically for impairment. 

is capitalized as an asset in charlie's corps books and amortized over time. 

has no impact whatsoever on either companies’ financial statements. 

is treated as income for the current fiscal period.