Pencil Company purchased 40 percent ownership of Stylus Corporation on January 1,20X1, for $155,000. Stylus's balance sheet at the time of acquisition was as follows: During 20X1 Stylus Corporation reported net income of $25,000 and paid dividends of $9,000. The fair values of Stylus's assets and liabilities were equal to their book values at the date of acquisition, with the exception of buildings and equipment, which had a fair value $29,000 above book value. All buildings and equipment had remaining lives of five years at the time of the business combination. The amount attributed to goodwill as a result of its purchase of Stylus shares is not impaired. Required: a. What amount of investment income will Pencil Company record during 20X1 under equity-method accounting? b. What amount of income will be reported under the cost method? c. What will be the balance in the investment account on December 31,201