Soochow Corp. has a new accounting co-op student who heard that the accounting for equity investments changes with the amount of shares held. The student needs to know the accounting differences between two different scenarios and how Soochow Corp. should record the transaction and balances if it owns different amounts of Hughes Ltd. shares as a long-term investment. Hughes Ltd. has a total of 35,000 shares outstanding.

Answer the following questions for each option:

\begin{tabular}{l|l|l} & Option1:3,800shares & Option2:11,900shares \\ \hline Whichaccountingmethodshouldbeusedforthislong-terminvestment? & & \\ \hline Journalentrytorecordpurchaseofsharesat$35each.Ignorebrokeragecommissions. & & \\ \hline Journalentrytorecognizeshareof$40,000individendsdeclaredandpaid. & & \\ \hline Journalentrytorecognize$75,000innetincomedeclaredbyHughesLtd. & & \\ \hline Journalentrytorecognizetheyear-endmarketvalueof$34pershare. & & \\ \hline Whatisthebalanceintheinvestmentsaccountatyear-end? & & \end{tabular}