January 15	Purchased 300,000 shares of A Company common stock for $20 per share. The investment represents a 25% ownership interest and gives Quiz Company the ability to significantly influence the investee. On the date of acquisition, the fair value of A Companys net assets exceeded the book value by $400,000. The amount is attributable to a building with a remaining useful life of 20 years.
February 1	Purchased 2,000 shares of B Company common stock for $25 per share. The amount represents a less than 1% ownership interest. On the date of acquisition, the fair value of B Companys net assets exceeded the book value by $100,000. The amount is attributable to equipment with a remaining useful life of 10 years.
May 1	Received dividends of $0.50 per share for the B Company common stock.
July 1	Purchased $100,000, 5% C Company bonds for $100,000. The bonds pay interest on June 30 and December 31. Quiz Company management has the positive intent and ability to hold the bonds until they mature.
July 1	Purchased $50,000, 4% D Company bonds for $50,000. The bonds pay interest on July 1 and January 1. Quiz Company management does not plan to actively trade the bonds but also does not plan to hold the bonds until they mature.
August 6	Received dividends of $0.25 per share for the A Company common stock.
October 1	Purchased $80,000, 6% E Company bonds for $80,000. The bonds pay interest quarterly with the next interest payment date on December 31. Quiz Company management intends to trade the bonds in the short term.
Year 2
January 1	Sold all of the C Company bonds for $105,000.
January 1	Sold all of the D Company bonds for $55,000.
January 1	Sold all of the E Company bonds for $90,000.
January 1	Sold 1,000 shares of the B Company common stock for $27 per share.
May 1	Received dividends of $0.50 per share for the remaining shares of B Company common stock.
August 6	Received dividends of $0.25 per share for the A Company common stock.

A Company reported net income of $1,000,000 for the year ended December 31, Year 1 and $1,200,000 for the year ended December 31, Year 2.

B Company reported net income of $2,000,000 for the year ended December 31, Year 1 and $2,100,000 for the year ended December 31, Year 2.

The following fair values were available for the investments as of December 31, Year 1 and Year 2.

	Year 1	Year 2
A Company	$21 per share	$19 per share
B Company	$27 per share	$28 per share
C Company	$105,000	$99,000
D Company	$55,000	$58,000
E Company	$90,000	$95,000

1) Determine the pretax increase (decrease) in net income in Year 1 resulting from the investments.

2)Determine the balance of the fair value adjustment account on December 31, Year 1 resulting from the investments.

3)Determine the pretax increase (decrease) in net income in Year 2 resulting from the investments.

4)Determine the pretax increase (decrease) in other comprehensive income in Year 2 resulting from the investments