Orange Inc. acquired 10% (50,000 shares) of the outstanding common stock of Buckeye Inc. On January 1, 2018 for $1,200,000 (price was $35,000 over net book value, related to Oranges share of under-valued assets with a remaining life of 7 years; st-line depreciation). Buckeye declared and paid $950,000 of cash dividends during 2018. Reported net income was $1,460.000. Buckeyes year-end stock price was $25/share.

a) Prepare required journal entries for Orange Inc. for 2018 assuming Orange accounts for the securities using the fair value method. Include the acquisition entry.

Date	Accounts	Debits	Credits

b) Orange acquires 20% of Laker Enterprises and can exercise significant influence. Prepare required journal entries for Orange for 2018. The purchase price on 1/1/2018 was $2,400,000 which was $70,000 over net book value (all related to Orange's share of under-valued assets with a remaining life of 7 years using straight-line depreciation). Laker Enterprises declared and paid cash dividends of $950,000 during 2018 and reported net income of $1,460,000. No transition entry for moving to the equity method is required.

Prepare required journal entries for Orange Inc. for 2018 assuming Orange accounts for the securities using the fair value method. Include the acquisition entry.

Date	Accounts	Debits	Credits

c) At what amount is the investment in securities reported on the Orange balance sheet under each of the above methods at December 31, 2018? What is Orange's net investment income and/or dividend income reported in 2018 under each of these methods (hint: prepare t-accounts)?

	Buckeye	Laker Enterprises
Investment Account
Fair Value Adjustment Account
Investment (Balance Sheet Presentation)
Investment income (Income Statement Presentation)