On January 1, 2020, Marvel Company purchased an investment in Stark Industries for $5 million, representing 35% of the book value of Stark Industries. During the year, Stark reported net income of $1,200,000 and pays cash dividends of $100,000. At the end of the year, the fair value of Marvels investment is $5.4 million.

Required

1. At what amount is the investment reported on Marvels balance sheet at year-end?
2. What amount of income from investments does Marvel report?
3. Prepare journal entries to record the transactions for Marvel Company.