On January 1, 2016, Field Company acquired 40% of North Company by purchasing 8,000 shares for $144,000 and obtained significant influence. On the date of acquisition, Field calculated that its share of the excess of the fair value over the book value of Norths depreciable assets was $15,000 and that the purchased goodwill was $12,000. At the end of 2016, North reported net income of $45,000 and paid dividends of $0.70 per share. Field depreciates its depreciable assets over a 12-year remaining life.

Required:

1.	Prepare all the journal entries of Field to record the preceding information for 2016.
2.	Next Level What is the conceptual justification for the use of the equity method?

Jan 1 Investment in Stock 144,000 Cash 144,000

Dec 31 Cash 5,600 Investment in stock 5,600

Dec 31 Investment in stock 18,000 Investment income 18,000

Dec 31 Investment income ??? Investment in stock ??? (NOT $500 as answered in a previous post-that is incorrect!!)