On 01-01-19 Leia paid $5,000,000 for 150,000 of the 500,000 shares of Evan's outstanding common stock.

• During 2019, Evan reported a net income of $900,000 and paid $100,000 of dividends to all of its shareholders.

• During 2020, Evan reported a net loss of $40,000 and paid $100,000 of dividends to all of its shareholders.

• As of 12-31-19 and 12-31-20, the fair market value of one share of Evan’s stock was $35 and $30, respectively.

Assume Leia’s interest in Evan gives Leia the ability to exercise significant influence over Evan’s operating and financial policies.

• Prepare the entry Leia should make on 01-01-19 for the purchase of the Evan stock. • Prepare any additional entry(ies) Leia should make during 2019 and 2020 related to her investment in Evan.

• Before income taxes, what should Leia report on her 2019 and 2020 income statements as a result of her investment in Evan? Clearly describe what and how much Leia should report.

• What should be the carrying amount of Leia’s investment on her 12-31-19 and 12-31-20 balance sheets?