NOP Ltd. purchased 25 percent of QRS Corporation's voting stock on January 1, 2013, for £3.5 million in cash. At the date of acquisition, QRS reported its total assets at £65 million and its total liabilities at £60 million. Investigation revealed that QRS's vehicles (5-year life) were overvalued by £1.2 million and it had an unreported software (2-year life) valued at £500,000. QRS declares and pays £110,000 in dividends and reports net income of £260,000 in 2021.

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