Posada Company acquired $7,000$ of the $10,000$ outstanding shares of Sabathia Company on January $1,2022,$ for $$840,000.$ The

subsidiary's total fair value was assessed at $$1,200,000$ although its book value on that date was $$1,130,000.$ The $$70,000$ fair value in

excess of Sabathia's book value was assigned to a patent with a five$-$year remaining life.

On January $1,2024,$ Posada reported a $$1,085,000$ equity method balance in the Investment in Sabathia Company account. On

October $1,2024,$ Posada sells $1,000$ shares of the investment for $$191,000.$ During $2024,$ Sabathia reported net income of $$120,000$

and declared dividends of $$40,000.$ These amounts are assumed to have occurred evenly throughout the year.

Required:

a$.$ How should Posada report the $2024$ income that accrued to the $1,000$ shares prior to their sale?

b$.$ What is the effect on Posada's financial statements from this sale of $1,000$ shares?

a$.$ Posada's income for shares sold

b$.,$ to Posada's additional paid$-$in capital