On January 1, 2020 Haghoek company owns 40% (4,000 shares) of Rohof Inc., which it purchased several years ago for an amount of 182,000 in cash. Since the date of the acquisition, the equity method has been applied. The book value of the investment account has increased to an amount of 293,400 as of January 1, 2020.

On the date of the acquisition, Haghoek recognized an excess value for patent over the book value in the accounts of Rohof. From this excess value Haghoek still recognizes an annual amortization of 12,000.

During 2020, Rohof reports net income of 342,000 and a 120,000 other comprehensive loss, both incurred uniformly throughout the year. No dividends were declared during the year.

Haghoek sold 800 shares of Rohof on August 1, 2020 for 93,000 in cash. However, Haghoek retains the ability to significantly influence the investee.

During the last quarter of 2019, Haghoek sold 50,000 in inventory (which it had originally purchased for only 30,000) to Rohof. At the end of that fiscal year, Rohofs inventory retained 10,000 (at sales price) of this merchandise, which was subsequently sold in the first quarter of 2020.

Question 1

On Haghoeks financial statements for the year ended December 31, 2020, what amounts for Equity on income, Other comprehensive income and Gain on the sale of part of the investment, would be reported from its ownership in Rohof (To calculate the gain, first calculate the value of the investment in Rohof on August 1, 2020)?

Question 2

Give the journal entries for Haghoek to record:

• The equity on income from Rohof;
• The other comprehensive income from Rohof;
• The gain on sale of 800 shares in Rohof.