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.7 Equity Method Investment, Intercompany Sales Harcker Corporation acquires 40 percent of Jackson Corporation's voting stock on January 3,2017, for $40 million in cash. Jackson's net assets were fairly reported at $100 million at the date of acquisition. During 2017, Harcker sells $130 million in mer. chandise to Jackson at a markup of 30 percent on cost. Jackson still holds $26 million of this merehan. dise in its ending inventory. Also during 2017, Jackson sells \$54 million in merchandise to Harcker at at markup of 20 percent on cost. Harcker still holds $12 million of this merchandite in its ending inventory. Jackson reports 2017 net income of $10 million. Required * a. Calculate Harcker's equity in Jackson's net income for 2017. b. Assume Harcker reports total 2017 sales revenue and cost of sales of $310 million and \$262 million, respectively, while Jackson reports total 2017 sales revenue and cost of sales of \$254 million and $235 million, respectively. Compute each company's gross margin on sales as reported following U.S. GAAP. Now compute gross margin on sales again, excluding intercompany sales, Comment on the results