Large Company purchases 40% of Small Company on January 1, 2020 for $500,000. This acquisition gives Large Company significant influence over Small Company. During 2020, Small Company reports net income of $90,000 and paid cash dividends of $30,000 on September 1, 2020.

Required:

1. Prepare journal entry to record the purchase of Small Company stock.
2. Prepare the journal entry to record the receipt of the cash dividend.
3. Prepare the journal entry to record Large Company's share of Small Company's net income.
4. What is the balance in the Investment account as of December 31, 2020.
5. What effect does this investment have on net income for fiscal year ending December 31, 2020?
6. What effect would the investment have on net income had the fair value method been elected assuming that the fair market value of the shares were $520,000?