1. On January 1, 2020, Allan acquires 8 percent of Bellevues outstanding common stock for $41,110. Allan classifies the investment as an available-for-sale security and records any unrealized holding gains or losses directly in owners equity. On January 1, 2021, Allan buys an additional 13 percent of Bellevue for $54,560, providing Allan the ability to significantly influence Bellevues decisions.

During the next two years, the following information is available for Bellevue:

Income Dividends Common stock fair value (12/31)

2020 $70,000 $30,000 $420,000

2021 80,000 90,000 400,000

In each purchase, Allan attributes any excess of cost over book value to Bellevues franchise agreements that had a remaining life of 13 years at January 1, 2020. Also at January 1, 2020, Bellevue reports a net book value of $340,000.

Assume Allan applies the equity method to its investment in Bellevue account:

(A-1) On Allans December 31, 2021, balance sheet, what amount is reported for the investment in Bellevues account?

(A-2) What amount of equity income should Allan report for 2021?

(A-3) Prepare the January 1, 2021, journal entry to retrospectively adjust the Investment in Bellevue account to the equity method.

Assume Allan elects the fair-value reporting option for its investment in Bellevue:

(B-1) On Allans December 31, 2021, balance sheet, what amount is reported for the investment in Bellevue account?

(B-2) What amount of income from its investment in Bellevue should Allan report for 2021?