On January 6, Year 1, Bulldog Co. purchased 28% of the outstanding stock of Gator Co. for $245,700. Gator Co. paid total dividends of $28,900 to all shareholders on June 30. Gator had a net loss of $56,500 for Year 1.

Required:

A.	Journalize Bulldogs purchase of the stock, receipt of the dividends, and the adjusting entry for the equity loss in Gator Co. stock. Refer to the Chart of Accounts for exact wording of account titles.
B.	Compute the balance of Investment in Gator Co. Stock on December 31, Year 1.
C.	How does valuing an investment under the equity method differ from valuing an investment at fair value?

a. Journalize Bulldogs purchase of the stock, receipt of the dividends, and the adjusting entry for the equity loss in Gator Co. stock. Refer to the Chart of Accounts for exact wording of account titles.

B. Compute the balance of Investment in Gator Co. Stock on December 31, Year 1.

C. How does valuing an investment under the equity method differ from valuing an investment at fair value?

Under the equity method, the investor will record their proportionate share of the net increase (or decrease) of the book value of the investee resulting from ________. The fair value method uses ________ to value the investment in the investee. These two methods result in different valuations because the equity method is based upon _________, while the fair value approach uses ___________. The two methods ___________ related to each other over time. While changes in book value can influence market prices, many other variables can influence the market price of a stock.