On January 1, 2006, Hall acquired 25 percent of the outstanding shares of Oates for $250,000. Information related to this investment is presented below:

On January 1, 2006, the market value of Oates was $1,000,000. The book value of Oates on that date was $800,000. This $200,000 difference related to an intangible asset self-developed by Oates. This intangible asset has 10 years useful life as of Jan. 1, 2006 (HINT: this refers to basis differences). Both companies use straight-line amortization.

For the year ended December 31, 2006, Oates recorded Net Income of $160,000 and declared (and paid) dividends of $120,000.

On December 31, 2006, the market value of Oates was $1,200,000.

1. a. Provide the journal entries made by Hall during 2006 to account for its investment in Oates.
2. b. At what amount was the investment in Oates listed on Hall’s December 31, 2006 Balance Sheet?