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On January 1, 2020, Coldspring Corp. paid $770,000 to acquire Whitt Co. Coldspring used the equity method to account for the investment. The following information

On January 1, 2020, Coldspring Corp. paid $770,000 to acquire Whitt Co. Coldspring used the equity method to account for the investment. The following information is available for the assets, liabilities, and stockholders' equity accounts of Whitt:

Book Value

Fair Value

Current assets

$95,000

$95,000

Land

95,000

120,000

Building (twenty year life)

255,000

310,000

Equipment (five year life)

185,000

190,000

Current liabilities

40,000

40,000

Long-term liabilities

65,000

65,000

Common stock

140,000

Additional paid-in capital

300,000

Retained earnings

210,000

Whitt earned net income for 2020 of $125,000 and paid dividends of $18,000 during the year.

1. The 2020 consolidation entry to reverse Coldsprings recognition of Whitt's income and dividends in the current year would include a net credit to Equity Investment for:

2.If Coldspring had income from its own operations, excluding any investment income, of $425,500 in 2020, what would be consolidated net income?

The answers are 103,250 and 546,750, How to get these answers?

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