Please answer question 1 using the Fair value method.

In January 2, 2020, Texas Inc. purchased 30,000 shares of Smith Co. common stock for $720,000. Smith had 100,000 shares outstanding, so that purchase represented 30% of Smith's total shares. At the time of the purchase, the book value of Smith Company's net assets was $2,100,000. Smith owned the following assets whose fair values differed from their book values: Asset Equipment Patent Book Value 550,000 25,000 Fair Useful Value Life 578,000 8 Years 20,000 4 Years During 2020, Smith purchased merchandise for $72,000 and sold it to Texas for $100,000. Texas sold 75% of that merchandise during 2020. The remaining 25% was still in Texas's inventory at year-end. Smith reported earnings of $120,000 for 2020 and paid cash dividends of $50,000. At year end, the market price of Smith Co. common stock was $25 per share. 1. Assume that Texas's 30% investment does not allow Texas to exert significant influence of Smith. a. What accounting method should Texas use to account for this investment? Why? b. Computer the amount of investment Income that Texas will report in its 2020 income statement as a result of its investment in Smith c. Computer the amount of any unrealized holding gain or loss that Texas will report in its 2020 income statement as a result of this investment. d. What will be the balance in Texas's account, Investment in Smith at the end of 2020 e. At what value will this investment be reported in Texas's balance sheet at the end of 2020