Part I

Lynbrook, Inc. acquired 40,000 of the 100,000 outstanding shares of ScanHouse Corporation on April 1, 2021, for $400,000 and obtained significant influence. The following information concerning ScanHouse is available on the date of acquisition:

Depreciable assets (remaining life, 15 years) Other assets Total Liabilities

Common stock Retained earnings Total

Book Value $ 600,000 $

500,000

$ 1,100,000 $ $ 300,000 $

250,000 550,000

$ 1,100,000

Fair Value 700,000

450,000

1,150,000 320,000

Subsequently, ScanHouse paid a cash dividend of $40,000 on August 31, 2021, and reported net income $155,000 on December 31, 2021.

Required:

1. Prepare journal entries for Lynbrook to record the preceding information.

2. What is the balance in Lynbrook's investment account on December 31, 2021? Show all

   computations.

Part II

The manager of the investment group of Lynbrook, Inc. invested some of the companys excess cash in equity securities. During the first part of 2021, the following transactions were made in regard to these equity securities:

Jan. 4 Jan. 20 Feb . 15 March 16 March 20

Purchased 200 shares of GameStop, Inc. common stock at $86 per share. Purchased 300 shares of AMC, Inc. preferred stock at $63 per share. Sold 100 shares of GameStop, Inc. common stock at $89 per share. Purchased 400 shares of Blackberry, Inc. common stock at $37 per share. Sold 100 shares of AMC, Inc. preferred stock at $62 per share.

On March 31, 2021, the market values of the shares were as follows:

GameStop AMC Blackberry

$87.00 $61.00 $37.25

Lynbrook held no equity securities at the beginning of 2021. (continued)

Required:

1. Prepare journal entries to record the preceding information.

2. Show what Lynbrook reports on its March 31, 2021 income statement for the equity securities.

3. Show how Lynbrook will report these equity securities on its March 31, 2021, balance sheet.