Nike Inc. purchased 25 percent of Adidas AG's voting stock on January 1, 2015, for £3.5 million in cash. At the date of acquisition, Adidas reported its total assets at £65 million and its total liabilities at £60 million. Investigation revealed that Adidas's inventory (2-year life) was overvalued by £1.5 million and it had an unreported technology (3-year life) valued at £600,000. Adidas declares and pays £110,000 in dividends and reports net income of £260,000 in 2021.

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