On January 1, 2013, Pierce, Inc., purchased 18,400 shares of Marion Company for $552,000, giving Pierce 10 percent ownership of Marion. On January 1, 2014, Pierce purchased an additional 36,800 shares (20 percent) for $1,269,600. This latest purchase gave Pierce the ability to apply significant influence over Marion. The original 10 percent investment was categorized as an available-for-sale security. Any excess of cost over book value acquired for either investment was attributed solely to goodwill.

Marion reports net income and dividends as follows. These amounts are assumed to have occurred evenly throughout these years. Dividends are declared and paid in the same period.

	Net Income	Cash Dividends (paid quarterly)
2013	$399,000	$106,000
2014	588,000	136,000
2015	641,000	175,500

On July 1, 2015, Pierce sells 3,680 shares of this investment for $53 per share, thus reducing its interest from 30 to 28 percent. However, the company retains the ability to significantly influence Marion. Using the equity method, what amounts appear in Pierces 2015 income statement?

Problem 1-21 (LO 1-1, 1-2, 1-3, 1-4, 1-5a, 1-5d) On January 1, 2013, Pierce, Inc., purchased 18,400 shares of Marion Company for $552,000, giving Pierce 10 percent ownership of Marion. On January 1, 2014, Pierce purchased an additional 36,800 shares (20 percent) for $1,269,600. This latest purchase gave Pierce the ability to apply significant influence over Marion. The original 10 percent investment was categorized as an available-for-sale security. Any excess of cost over book value acquired for either investment was attributed solely to goodwill. Marion reports net income and dividends as follows. These amounts are assumed to have occurred evenly throughout these years. Dividends are declared and paid in the same period. 2013 2014 2015 Net Income $399,000 588,000 641,000 Cash Dividends (paid quarterly) $106,000 136,000 175,500 On July 1, 2015, Pierce sells 3,680 shares of this investment for $53 per share, thus reducing its interest from 30 to 28 percent. However, the company retains the ability to significantly influence Marion. Using the equity method, what amounts appear in Pierce's 2015 income statement? As total income accrual (no unearned gains) As on sale of shares