Presented below are two independent situations.

Situation 1
Hatcher Cosmetics acquired 10% of the 212,200 shares of common stock of Ramirez Fashion at a total cost of $14 per share on March 18, 2012. On June 30, Ramirez declared and paid a $77,800 cash dividend. On December 31, Ramirez reported net income of $124,900 for the year. At December 31, the market price of Ramirez Fashion was $15 per share. The securities are classified as available-for-sale.

Situation 2
Holmes, Inc. obtained significant influence over Nadal Corporation by buying 27% of Nadal