Microsoft Corporation purchased 35 percent of LinkedIn's voting stock on January 1, 2014, for £6 million in cash. At the date of acquisition, LinkedIn reported its total assets at £100 million and its total liabilities at £92 million. Investigation revealed that LinkedIn's software (5-year life) was overvalued by £4 million and it had an unreported customer base (3-year life) valued at £1.2 million. LinkedIn declares and pays £200,000 in dividends and reports net income of £450,000 in 2021.

Required: Prepare the necessary journal entries on Microsoft's books to report the above information for 2021 assuming Microsoft uses the equity method to report its investment.