On January 3, 2016, Nailor Industries paid $42 million for 6 million common shares of Thrift House, Inc. The investment represents a 30% interest in the net assets of Thrift House and gave Nailor the ability to exercise significant influence over Thrift House's operating and financial policies. Nailor received dividends of $0.5 per share on December 15, 2016 and Thrift House reported net income of $12 million for the year ended December 31, 2016. The market value of Thrift House's common stock at December 31, 2016 was $6.5 per share. Required: Assuming that the fair value of Thrift House's assets and liabilities are equal except for: The fair value of Thrift House's depreciable assets, with an average remaining useful life of six years, exceeded their book value by $24 million. The fair value of Thrift House's inventories exceeded their book value by $10 million. 50% of the inventories were sold during 2016. Part 1. Prepare the journal entries required by Nailor for 2016. Part 2. What amount should Nailor report as its income from its investment in Thrift House for the year ended Dec 31, 2016? How much, if any, is reported on the income statement? How much, if any, as other comprehensive income? What amount should Nailor report in its balance sheet as its investment in Thrift House? Part 3. Suppose that Nailor Industries takes the fair value option for its investment in Thrift House. How your answers to Part 1 and Part 2 questions would be different